Joe Edgeworth

The Edgeworth Insurance Group

Who Can Benefit From A Joint And Survivor Annuity?

“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.

Joe Edgeworth picture

Joe Edgeworth

The Edgeworth Insurance Group

2715 Spring Valley Rd.

Lancaster, Pennsylvania 17601

(800) 824-8609

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