How Does a Joint Lifetime Income Annuity Work
Jason Stolz CLTC, CRPC
A joint lifetime income annuity is one of the most reliable ways for couples to secure predictable retirement income that lasts as long as either spouse is alive. Unlike investment accounts that fluctuate or pensions that may end when the primary worker passes away, a joint lifetime income annuity creates a protected income stream built to continue for two lifetimes. For married couples, partners with long-term commitments, or anyone sharing financial responsibilities in retirement, it can serve as the foundation of a permanent income plan.
At Diversified Insurance Brokers, we help retirees nationwide evaluate joint lifetime income annuities from dozens of carriers. Because income payouts, survivor benefits, fees, and liquidity rules vary significantly by company, it is essential to compare options side-by-side. This guide explains how joint lifetime income annuities work, how the income payout is determined, how survivor income is structured, and how these products can complement IRAs, 401k rollovers, pensions, and Social Security.
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A joint lifetime income annuity provides guaranteed payments for as long as either person covered by the contract is alive. For many couples, this solves one of the biggest retirement risks: what happens to income when one spouse passes away. Pensions often reduce survivor benefits to 50% or even 0%, and Social Security automatically eliminates one check. A joint lifetime annuity can eliminate this gap by ensuring income continues without interruption.
These annuities are typically purchased using retirement funds such as a rollover IRA, 403b, 401k, TSP, or pension lump sum. You can review how these accounts function using guides like how does an IRA work, how does a 401k work, or how does a 403b work before choosing which funds to use for income planning.
How the Income Is Calculated
Income is based on several factors: the age of both individuals, the amount of premium contributed, whether income begins immediately or is deferred, and whether optional benefits are added. Couples who defer income—sometimes only a few years—can dramatically increase their future payout because of guaranteed roll-up rates, income bonuses, or contractually increasing income multipliers. This is why many retirees evaluate fixed indexed annuities with income riders, as they provide downside protection while allowing income values to grow before payouts begin.
For example, if a couple rolls over $300,000 from a 401k or TSP into a fixed indexed annuity with an income rider and defers income for five years, the guaranteed lifetime payout may be significantly higher than leaving the money in market-based accounts. To understand how much income your rollover could generate, you can use the income calculator below.
Lifetime Income Calculator
How Joint Income Continues for the Survivor
When one spouse passes away, income from a joint lifetime annuity continues exactly as outlined in the contract. Most couples choose 100% survivor continuation—meaning payments continue at the full amount for the surviving spouse’s life. This ensures that the surviving spouse can maintain the same lifestyle, preserve independence, and avoid the sudden financial shock caused by losing one Social Security benefit.
Other options include 75% and 50% survivor continuation. These may result in a higher initial payout but lower survivor income. Many retirees choose 100% continuation for long-term security, especially when planning around mortgage payments, long-term care expenses, or lifestyle needs.
To understand how these options compare, you can also explore educational guides like how annuity income riders work or do income riders have fees for more detail.
Why Couples Choose a Joint Lifetime Income Annuity
Couples frequently select joint lifetime income annuities when they want permanent income that does not depend on market performance. While investment accounts can rise and fall, these annuities provide contractual guarantees. Many retirees also prefer annuities because they simplify budgeting: a predictable “retirement paycheck” arrives every month for the rest of their lives.
Joint annuities also help reduce sequence-of-returns risk. This occurs when market downturns early in retirement reduce a portfolio faster than expected. Because a joint lifetime annuity keeps delivering income regardless of market conditions, it can help preserve IRAs, Roth IRAs, and taxable accounts for longer. Many retirees use a joint annuity to cover essential expenses—housing, utilities, food, insurance—while using investment accounts for discretionary and legacy goals.
Liquidity and Access to Funds
Although joint lifetime income annuities are designed for long-term income, many policies still offer flexibility. Some allow a portion of the account value to be withdrawn each year without penalty. Others include enhanced benefits for long-term care, chronic illness, or home health situations. If liquidity is a major concern, you can review how fixed indexed annuities work or compare flexible options before committing.
Coordinating Income With Your Overall Retirement Plan
A joint lifetime annuity should be part of a larger income plan that includes Social Security timing, required minimum distributions, tax strategy, and asset allocation. Many clients pair a joint annuity with a fixed annuity (for guaranteed accumulation) or a MYGA (multi-year guaranteed annuity) to lock in stable interest rates. Others use an annuity to replace a pension that does not offer strong survivor benefits. For those evaluating income options from retirement plans, you can reference guides such as how to transfer a 401k to an annuity or how to transfer a pension to an annuity.
How Diversified Insurance Brokers Helps
Because we are an independent firm representing over 75 carriers, we can compare income payouts across a wide range of annuity companies. Different carriers favor different ages, deferral periods, and crediting strategies—so the highest income option can vary dramatically. We shop the market for you, analyze payout guarantees, evaluate survivor benefits, and help structure a plan that supports two lifetimes of income.
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FAQs: How Does a Joint Lifetime Income Annuity Work?
Does a joint lifetime income annuity pay for two lifetimes?
Yes. A joint lifetime annuity pays as long as either person covered by the contract is alive. Most couples choose 100% survivor continuation so the surviving spouse receives the same income amount. This makes it a strong complement to Social Security, which reduces to a single check after one spouse passes away.
What happens when one spouse dies?
Income continues to the surviving spouse according to the option chosen at contract issue. Most retirees select full continuation, but 75% and 50% options may also be available. For more details on how income riders function, see how annuity income riders work.
Can we start income immediately?
Yes. Many joint annuities offer immediate payouts, especially when using funds from a pension rollover, 403b, 401k, or IRA. If you want a higher payout, you can delay income using a guaranteed roll-up period. You can estimate payouts using our lifetime income calculator.
Can we change the survivor percentage later?
No. Survivor options are locked in at contract issue, so it is essential to choose carefully. Reviewing both 100% continuation and reduced-continuation scenarios helps ensure your long-term needs are met.
What if we need liquidity?
Some joint annuities allow annual penalty-free withdrawals or include benefits for chronic illness or nursing care. If liquidity is important, compare flexible options or review what is a deferred annuity before choosing a contract.
What kind of money can we use to fund the annuity?
You can use most qualified retirement accounts—401k, 403b, TSP, pension rollovers—or non-qualified assets. For help, see guides like how to transfer a 401k to an annuity or how to transfer a pension to an annuity.
About the Author:
Jason Stolz, CLTC, CRPC, is a senior insurance and retirement professional with more than two decades of real-world experience helping individuals, families, and business owners protect their income, assets, and long-term financial stability. As a long-time partner of the nationally licensed independent agency Diversified Insurance Brokers, Jason provides trusted guidance across multiple specialties—including fixed and indexed annuities, long-term care planning, personal and business disability insurance, life insurance solutions, and short-term health coverage. Diversified Insurance Brokers maintains active contracts with over 100 highly rated insurance carriers, ensuring clients have access to a broad and competitive marketplace.
His practical, education-first approach has earned recognition in publications such as VoyageATL, highlighting his commitment to financial clarity and client-focused planning. Drawing on deep product knowledge and years of hands-on field experience, Jason helps clients evaluate carriers, compare strategies, and build retirement and protection plans that are both secure and cost-efficient.
