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What Is a Joint and Survivor Annuity?


joint and survivor annuityWhen you purchase an annuity, you’re buying an insurance contract to provide guaranteed income for yourself. You can purchase an annuity to benefit yourself but if you’re married, you could choose a joint and survivor annuity instead. Learn more about how a joint and survivor annuity works and whether one belongs in your financial plan. If you need more guidance, consider working with a financial advisor who can help you create that financial plan or see how any type of annuity might make sense for your long-term goals. 

Joint and Survivor Annuity Definition

In a typical annuity contract, the insurance company agrees to make payments to you on a predetermined schedule. For example, you could choose an immediate annuity, with payments beginning right away, or a deferred annuity with payments that begin at a future date. In either case, you can set the annuity up to pay money to you for a specific time period or for the rest of your life. When you’re the only annuitant, meaning the only person who benefits from the payouts, it’s called a single life annuity.

A joint and survivor annuity is established for the benefit of more than one person. When you set up an annuity this way, you and your spouse or joint annuitant can receive monthly benefits for life. If you pass away first, your spouse would continue receiving payments for the rest of their lifetime. And if they pass away first, you would keep receiving payments from the annuity.

Pros and Cons of a Joint and Survivor Annuity

A joint and survivor annuity can help you have a stable income in retirement and it helps protect your spouse, or another beneficiary if you pass away first. There are pros and cons you should weigh before deciding to move forward.


The obvious advantage of choosing a joint and survivor annuity over a single-life annuity is the ability to make sure payments continue after one annuitant passes away. Say you’re the primary breadwinner, for example. If something happens to you, your spouse could keep receiving annuity payments which could help them fill in some of the financial gap caused by the loss of your income. Remember, these payouts are good for life so they’d always be able to count on that source of income.

A single-life annuity, on the other hand, would be paid to you only. Once you pass away, the payments from the annuity would cease. Without regular annuity payments to count on, you might have to find another way to provide for your spouse financially, such as a death benefit from a life insurance policy or having them inherit your IRA or other investment accounts.


When you choose a joint and survivor annuity over a single-life annuity, it means making a trade-off. The payout that you receive from the annuity is lower than what you’d get from a single-life annuity since you’re splitting it between two people, assuming you have the same amount of money to invest in purchasing the annuity.

The number of benefits your spouse receives after you pass away may also be less than the amount you received as a couple. For example, say you have an annuity that pays out $7,000 a month to both of you. If you die (or your spouse dies), the terms of your annuity contract might reduce that amount to 50% or less. So instead of the full $7,000, your spouse might only receive $3,500 per month instead.

Besides that, there are general cons that can apply to any type of annuity. An annuity with a high premium is a drawback all its own. You may also pay surrender charges if you decide to sell some of your annuity for cash. You also may pay administrative fees and added fees for contract riders.

Another potential downside is that once you set up an annuity, you generally can’t change its payout structure. So if you buy a single-life annuity but want joint and survivor annuity instead, you can’t switch.

Tax Implications for a Joint and Survivor Annuity

joint and survivor annuity

Aside from regular income for life, a joint and survivor annuity could also provide a tax shelter. When you initially purchase an annuity, you can decide whether you want payments to begin immediately or at a later date. You can also choose between a fixed annuity, which offers a guaranteed rate of return, or a variable annuity with a higher risk-reward profile.

The money you invest in an annuity grows tax-deferred over time, meaning you won’t pay taxes on it until you begin taking withdrawals. With a qualified annuity, which can be funded through a traditional 401(k) or IRA, both the contributions and earnings are taxed at your ordinary income tax rate. With non-qualified annuities, which are funded with after-tax dollars, only the earnings are taxable. You can incorporate either type of annuity alongside traditional 401(k) and IRA plans, a Roth 401(k) or Roth IRA, and/or taxable investment accounts to manage your tax liability in retirement.

While joint and survivor annuities defer taxes, they don’t allow you to avoid them completely. Once payments begin, you’ll have to include those amounts as taxable income, which could increase your overall tax liability if you’re also taking withdrawals from tax-deferred or taxable accounts.

Including a Joint and Survivor Annuity In Your Retirement Plan

Whether this type of annuity or annuity is right for you depends largely on your retirement goals and needs. Your 401(k), IRA, or Social Security may determine how much of a payout you’ll need. Creating an estimated retirement budget can help you protect your income needs.

Also, consider the benefits of a joint and survivor annuity versus single life. Think about how much a joint benefit declines if one of you passes away. Benefits may not pay off debt, maintain current lifestyle or cover rising health care costs as they age. In that case, you might need to supplement an annuity with a term or permanent life insurance policy.

The Bottom Line

joint and survivor annuity

A joint and survivor annuity can provide income for you and your spouse during your lifetime. It also maintains an income stream for the surviving spouse if one of you passes away. When researching annuities, be sure to weigh the cost and tax consequences against any financial benefits you might enjoy.

Retirement Planning Tips

  • Consider talking to your financial advisor about what a joint and survivor annuity can (or can’t) do for your retirement. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Aside from annuity planning, consider the other avenues you have to save and invest for the future. If you have a 401(k) at work, review your contributions to see if you’re maxing out the annual limit. Take advantage of other tax-advantaged accounts, such as a Health Savings Account. An HSA provides triple tax benefits in tax-deductible contributions, tax-deferred growth and tax-free withdrawals for qualified medical expenses.

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