Joint Income Annuity for Spouses

A joint income annuity (often called a joint and survivor annuity) turns a portion of your retirement savings into a guaranteed monthly paycheck that continues for as long as either spouse is alive. Instead of wondering, “What happens to my spouse’s income if I die first?” you can create a predictable, built-in solution.

At Diversified Insurance Brokers, we help couples build retirement income plans that coordinate annuities, Social Security strategies, pensions, and investments so both spouses are protected. If you’re just beginning to explore annuities, our Annuities 101 guide is a helpful starting point for understanding terms, guarantees, and product types.

How a Joint Income Annuity Works

With a joint income annuity, you typically fund the contract with a rollover (like an IRA or 401(k)), savings, or a transfer from another annuity. When you’re ready, you elect a joint lifetime payout option that continues for as long as either spouse is alive. The insurance company calculates your payment based on:

• Your ages and, in some cases, health status
• The amount of premium you contribute
• The type of annuity you choose (immediate, deferred, or via income rider)
• Whether payments are level or include a cost-of-living increase
• The survivor percentage you select (100%, 75%, or 50%, for example)

If you want a deeper dive into the mechanics of lifetime payouts in general, our retirement income annuity overview explains how insurers turn a lump sum into a predictable monthly paycheck.

Why Couples Choose Joint Lifetime Income

For many married couples, the biggest fear isn’t running out of assets together—it’s what happens if one spouse passes away and the surviving spouse loses income. A joint lifetime annuity is designed to prevent a “survivor income cliff.”

Key advantages include:

• Two-lifetime protection: Payments continue as long as at least one spouse is alive, giving the survivor predictable cash flow for essential expenses.
• Budgeting simplicity: Your joint annuity can be paired with Social Security, pensions, and predictable investment withdrawals to cover housing, food, utilities, and healthcare.
• Longevity hedge for the “younger” or healthier spouse: If one spouse lives much longer than expected, income is still guaranteed for life.
• Coordinated planning: We often combine joint annuity income with strategies discussed in Social Security and annuities planning so both spouses are protected across multiple income sources.

If you already own an annuity that isn’t performing as expected, our annuity rescue plan framework can compare keeping your existing contract versus repositioning to improve survivor benefits or income.

Choosing the Right Survivor Percentage

One of the biggest decisions for a joint income annuity is the survivor percentage—how much of the original payment the surviving spouse will continue to receive. Common arrangements include:

• 100% to survivor: The survivor keeps the full payment for life.
• 75% to survivor: The survivor keeps 75% of the original payment.
• 50% to survivor: The survivor keeps half of the original payment.

The higher the survivor percentage, the lower the initial payment, because the carrier is promising income for a potentially longer combined lifetime. We typically model several combinations so you can see:

• How much income you’ll receive while both spouses are alive
• How much the survivor will keep if one spouse passes first
• How each option affects your remaining investable assets

For couples who are particularly concerned about the surviving spouse’s lifestyle, a 100% survivor option is common. Others may choose 75% or 50% and use the difference to maintain more liquid investments or to fund a spousal continuation-focused annuity strategy.

Optional Guarantees: Period Certain, Refund, and COLA

Beyond the survivor percentage, many joint income annuities offer additional guarantees and features:

• Life with period certain: Guarantees payments for life, but not less than a set period (e.g., 10 or 20 years). If both spouses pass away during the period, beneficiaries receive the remaining payments. You can learn more about this structure in our life with period-certain annuity overview.
• Cash refund options: If both spouses pass before receiving at least their premium back in payments, beneficiaries may receive a lump sum of any remaining amount, as discussed in our cash refund annuity guide.
• Cost-of-living adjustments (COLA): Some annuities let you add an annual step-up (e.g., 2% or 3% per year). Starting income is lower, but payments may better keep pace with inflation.

These features slightly reduce initial income but can be valuable for couples who want to protect beneficiaries or maintain buying power over a long retirement.

Income Riders vs. Annuitization

You can create joint lifetime income in two primary ways:

• Annuitization: You convert your annuity contract into a lifetime income stream. The decision is typically irrevocable, but payments are often higher than other options for a given premium.
• Guaranteed Lifetime Withdrawal Benefit (GLWB) rider: You keep your account value intact while drawing a guaranteed joint lifetime income from it. If the account ever goes to zero, the insurer continues payments for life.

There’s no universal “right” answer. Annuitization often maximizes guaranteed income for the dollars you invest, while GLWB riders can provide more flexibility and potential for residual value. The right choice depends on:

• How important liquidity is to you
• Whether leaving a legacy is a priority
• Your health, age, and desired start date for income

Our fixed indexed annuity education page walks through how many GLWB riders are built into indexed annuities and how they can pair with joint lifetime income.

Tax Treatment and Funding Sources

Most joint income annuities used by couples are funded with pre-tax retirement dollars, such as:

• Traditional IRAs and rollovers
• 401(k), 403(b), or 457(b) plan balances
• Old employer plans you’ve already left

In these cases, payments are generally taxed as ordinary income. When you use after-tax (non-qualified) money, part of each payment may be considered a tax-free return of principal until your cost basis is recovered.

If you’re exploring whether to move a retirement plan into an income annuity, our transfer guides—such as how to transfer an IRA to an annuity—explain how to complete tax-favored rollovers correctly. We coordinate joint income strategies with your tax professional so RMDs, Social Security, and portfolio withdrawals fit together coherently.

Common Mistakes Couples Should Avoid

• Choosing single-life income for the higher-earning spouse: This may maximize initial income but can leave the surviving spouse with a dramatic income drop.
• Starting income too early: Turning on income years before it’s needed can permanently reduce payouts for both lifetimes.
• Ignoring inflation: For long retirements, fixed payments may lose buying power. COLA options or laddering strategies can help.
• Comparing only “headline” rates: The best rate on paper is not always the highest actual lifetime income at your ages and start date.
• Overlooking survivor needs: The surviving spouse’s budget, healthcare costs, and preferred lifestyle need to be factored into the survivor percentage and guarantees.

Estimate Your Joint Lifetime Income

Use the calculator below to preview income for two lifetimes. Adjust ages, premium amounts, and payout options to see how your guaranteed paycheck changes.

Coordinating Joint Income With Your Overall Plan

A joint income annuity should fit into a broader plan—not replace it. Many couples use joint lifetime income to cover essentials, then invest the rest of their portfolio for long-term growth, legacy goals, or larger one-time expenses. Others combine a joint annuity with strategies like:

• Using a portion of assets for guaranteed income and keeping the rest in diversified investments
• Structuring income to align with pension and Social Security timing
• Coordinating with retirement risk-management strategies to reduce sequence-of-returns risk

For couples with more complex needs—such as blended families, business ownership, or significant inherited assets— we can explore additional options like spousal continuation features, term-certain overlays, or combining income annuities with legacy-focused life insurance strategies.

How Diversified Insurance Brokers Helps Couples

As an independent, family-owned firm licensed in all 50 states, Diversified Insurance Brokers is not tied to any single carrier. Our role is to help you:

• Clarify how much guaranteed income you truly need for essentials
• Compare joint lifetime quotes across highly rated annuity companies
• Evaluate survivor percentages, period-certain guarantees, and refund options
• Coordinate timing with Social Security, pensions, and required minimum distributions
• Review existing annuities using our annuity rescue plan process

Whether you’re just starting to think about retirement income or you’re ready to lock in guarantees, we’ll make sure you understand your options clearly—so your joint income annuity does exactly what you expect for both spouses.

Related Pages

• Do Annuities Pay an Income for Life?
• What Is a Joint Lifetime Income Annuity?
• Bonus Annuity Pros and Cons
• How Do Annuities Earn Interest?
• Best Fixed Indexed Annuities for Income