Who Can Benefit From A Joint And Survivor Annuity?

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About Joe Edgeworth

Joe has been a financial planner since 1992, working with individuals, families, and businesses. His company focuses on teaching people how they can invest their money safely, with a 100% guarantee of their principle, earn a very respectable rate of return, and have income guaranteed for their lifetime. Joe has also shown over 2,000 people how to protect their nest egg and their loved ones from the catastrophic cost of Long-Term Care, along with showing parents and grandparents how to safely and tax-efficiently transfer their wealth to their children.

“A “joint and survivor” annuity may provide greater peace of mind for couples over 65.  You will need to do some research before you purchase, however.”  Joe Edgeworth

As you probably already know, annuities are retirement income vehicles that can provide predictable, guaranteed income streams during retirement. A particular type of annuity, the joint and survivor annuity, is designed mainly to benefit retired couples. This type of customized annuity is a choice that may be appropriate for those who want guaranteed monthly income that continues for as long as either spouse lives. The opposite of a joint and survivor annuity is the single life annuity. A single life annuity stops payments when the annuitant dies.

If you believe you want a joint and survivor annuity, you must understand that they are not always the best choice, especially for younger couples. It would also be a good idea to calculate precisely how much your payments would be. Payments vary according to numerous factors, including how much money you put into the annuity and the projected life expectancies of both spouses. Some joint and survivor annuities also have fees. Ask your annuity specialist to break down those fees, if any, so you can see the impact they might have on your annuity’s value.

Depending on your contract, a joint and survivor annuity will typically deliver either 100% of the payments when the first annuitant passes away or a lower percentage, often around 50-75%. A 50% joint and survivor annuity pays the surviving spouse half of what the annuitants were getting when both were alive. So, if you were getting $800 a month from the annuity and passed away, the survivor will receive $400. Payments are guaranteed no matter which spouse passes away first.

Be aware that if you choose an annuity with a higher percentage, your initial payouts will be lower while you are both still alive. It’s critical to know how your lifestyle will be affected if you receive a reduced income stream. Again, consult an annuity expert and have them run the numbers for you.

What are some benefits of joint and survivor annuities?

Guaranteed payments for your surviving loved one. People choose a joint and survivor annuity to provide guaranteed income to help their spouse live better if they die first. Older married retires selecting a joint and survivor option often report they have more peace of mind knowing that their spouse will have at least one reliable source of income they are gone.

Potentially favorable tax treatment. When the first annuitant of a joint and survivor contract dies, the survivor stays on the initial payment schedule. This is a tax advantage because there is no obligation to pay taxes on money that the second annuitant would have gotten as the beneficiary of a single-life annuity. The surviving spouse also doesn’t need to worry about fees and administrative costs typically attached to beneficiary payouts.

The bottom line: For some retirees over 65 who are concerned about leaving their spouse a guaranteed source of income when they pass away, a joint and income annuity may be a wise choice. However, you must consider many factors before purchasing this particular product.

Since annuity products are relatively complicated, it’s crucial to seek advice from an experienced retirement income specialist. Your advisor can crunch all the numbers, consider your particular financial situation, and help you decide if a joint and survivor annuity will help you achieve your retirement goals.

About Joe Edgeworth

Joe has been a financial planner since 1992, working with individuals, families, and businesses. His company focuses on teaching people how they can invest their money safely, with a 100% guarantee of their principle, earn a very respectable rate of return, and have income guaranteed for their lifetime. Joe has also shown over 2,000 people how to protect their nest egg and their loved ones from the catastrophic cost of Long-Term Care, along with showing parents and grandparents how to safely and tax-efficiently transfer their wealth to their children.

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Annuities are a safe and reliable investment. They can transform your savings into a more predictable income. Speak with one of our qualified financial professionals today to find out how an annuity can offer you guaranteed monthly income for life.

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Content in our posted articles is deemed to be accurate but topics, facts and laws can change. It is always a good idea to verify facts before making decisions. Always seek authorized and professional advice regarding financial decisions which includes investing, annuity purchases, tax planning, changes in a financial portfolio and retirement planning.

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