Joint Income Annuity for Spouses
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Joint Income Annuity for Spouses
A joint income annuity (sometimes called a joint and survivor annuity) turns retirement savings into a guaranteed stream of income that lasts for two lifetimes—yours and your spouse’s. That means if one spouse passes away first, the surviving spouse continues receiving income for life. For couples who want paycheck-like stability to cover essential expenses, a joint income annuity can serve as the core of a durable retirement plan.
At Diversified Insurance Brokers, we help couples compare annuities across more than 75 carriers, model survivor options, and coordinate timing with Social Security and other assets. If you’re just starting research, our annuities 101 basics guide is a friendly primer on terms, types, and how guarantees work.
How a Joint Income Annuity Works
With a joint income annuity, you fund a contract during an accumulation phase (or with a rollover or lump sum), then elect a payout option that continues as long as either spouse is alive. Most carriers let you choose the survivor percentage—commonly 100%, 75%, or 50% of the initial payout. The higher the survivor percentage, the lower the initial payment, because the insurer is guaranteeing income over a longer expected period.
Before you decide on a start date, it’s smart to understand the rate environment. You can benchmark offers against current fixed annuity rates to see how timing might affect lifetime income.
Why Couples Choose Joint Lifetime Income
- Two-lifetime protection: Income doesn’t end at the first death; the survivor continues receiving guaranteed payments.
- Budgeting simplicity: Predictable cash flow helps cover housing, food, utilities, and healthcare without market worries.
- Longevity hedge: Protects against the financial risk of one spouse living far longer than expected.
- Coordination with benefits: Complements Social Security strategies, pensions, and portfolio withdrawals.
If you currently hold an older annuity or rider that isn’t meeting expectations, we can evaluate a potential repositioning alongside your existing contract using our annuity rescue plan approach to see whether staying put or updating makes more sense.
Choosing the Right Survivor Percentage
Most couples default to a 100% survivor option so the surviving spouse keeps the full payment. Others choose 75% or 50% to increase the initial income while still protecting a surviving spouse. The “best” option depends on your fixed expenses, other guaranteed income sources, and legacy goals. We often model several survivor percentages so you can compare cash flow today versus resiliency later.
Payments can also include features like period-certain guarantees (e.g., “life with 10 years certain”) or cash refund provisions, which protect beneficiaries if both spouses pass earlier than expected. These features reduce initial income slightly but increase peace of mind.
Income Riders vs. Annuitization
You can secure joint lifetime income in two broad ways:
- Annuitization: Irrevocably converts your contract into a lifetime income stream. You can add a survivor percentage, period-certain, or refund feature to protect heirs.
- Guaranteed lifetime withdrawal benefit (GLWB) rider: Keeps the account intact while allowing lifetime withdrawals for two lives. Minimum income is guaranteed by the carrier; if crediting performs well, residual value and flexibility may be higher.
There isn’t a universal winner—annuitization can maximize guaranteed income; GLWBs can preserve more flexibility. We’ll show side-by-side comparisons so you can choose with confidence.
Tax Treatment and Funding Choices
If funded with IRA or 401(k) rollovers, joint lifetime income is typically taxed as ordinary income. If funded with non-qualified savings, a portion of each payment may be treated as a tax-free return of principal (via the exclusion ratio) until basis is recovered. We coordinate with your tax professional and align your start date with RMDs and overall tax planning.
Common Mistakes to Avoid
- Choosing a single-life payout for the larger earner and leaving the surviving spouse exposed to a drastic income drop
- Starting income earlier than necessary, reducing the payout for both lifetimes
- Ignoring inflation choices or cost-of-living adjustments when fixed expenses are likely to rise
- Comparing only headline rates instead of actual lifetime income at your planned start age
- Overlooking surrender schedules and liquidity rules when you still want flexible access
Estimate Your Joint Lifetime Income
Use the calculator to preview income for two lifetimes. Adjust funding and ages to see how your guaranteed payout changes.
Coordinating With the Rest of Your Plan
Joint lifetime income works best when it’s integrated with your Social Security choices, pensions (if any), and investment withdrawals. We design your annuity start date to meet monthly essentials while leaving your portfolio free to pursue growth. If you want a quick snapshot of prevailing offers before deciding, you can scan today’s fixed annuity rates and then ask us to model joint income at several start ages.
Design Your Joint Lifetime Income
We’ll compare multiple carriers and survivor options, then tailor a joint payout that protects both spouses.
How Diversified Insurance Brokers Helps Couples
We’re an independent, fiduciary agency licensed in all 50 states. Our process is simple: we learn your goals, compare carriers and riders, and provide clear illustrations so you can see the tradeoffs between higher initial income and stronger survivor protection. If you’re evaluating older contracts, our annuity rescue plan approach can test whether updates are warranted or if your current policy already does the job.
Book a Free Consultation
Talk with an advisor about survivor percentages, rider choices, and timing your start date for two-lifetime protection.
FAQs: Joint Income Annuity for Spouses
What is a joint income annuity?
It’s a lifetime income option that pays as long as either spouse is alive, protecting the survivor from an income cliff.
How does the survivor percentage work?
You choose 100%, 75%, or 50% to continue to the survivor. Higher survivor percentages reduce the initial payment but strengthen survivor security.
Is a GLWB rider better than annuitization for couples?
It depends. GLWBs can preserve liquidity and beneficiary value; annuitization can maximize guaranteed income. We compare both for your situation.
Can we add inflation protection?
Some contracts offer cost-of-living adjustments or step-up features. They can reduce initial income but help payments keep pace over time.
How are joint annuity payments taxed?
IRA-funded income is generally fully taxable. With non-qualified funds, part of each payment may be a tax-free return of principal until basis is recovered.
What happens if both spouses pass away early?
Period-certain or refund features can provide beneficiaries with remaining value or payments for a set time.
When should we start joint lifetime income?
Starting at or near retirement is common. Deferring longer usually increases the guaranteed payout for both lifetimes.
Can we change the survivor percentage later?
Once annuitized, most contracts are irrevocable. Some riders allow changes before income begins. We’ll confirm your specific options before you start.
How safe are joint income annuities?
They’re backed by the issuing insurer’s claims-paying ability. We prefer highly rated carriers and diversify when appropriate.
How do we compare offers quickly?
Use our embedded calculator above for estimates, then request a customized comparison using the Annuity Monday form for side-by-side quotes.
