What Is a Joint and Survivor Annuity

One of the biggest challenges in retirement planning isn’t just saving enough, it’s making sure your money lasts as long as you and your spouse do. A joint and survivor annuity can help solve that problem by guaranteeing income for both of your lifetimes. Whether one partner lives five years longer or twenty, this type of annuity ensures the surviving spouse continues to receive steady payments. For couples seeking long-term financial stability and peace of mind, it’s one of the most reliable ways to turn retirement savings into income that never runs out.

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.

Understanding a Joint and Survivor Annuity

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 designed to provide lifetime income for two people, typically spouses, ensuring that payments continue for as long as either person is alive. When you purchase this type of annuity, you agree to receive regular payments that start immediately or at a future date. After the first annuitant passes away, the surviving spouse continues to receive income, which can either remain the same or decrease slightly depending on the terms of the contract.

This type of annuity is especially valuable for couples who rely on shared income to cover household expenses. It helps protect the surviving spouse from financial hardship after one partner dies by guaranteeing that at least part of the income continues. For many retirees, this steady, predictable cash flow provides peace of mind and reduces the risk of one spouse outliving the household’s savings.

Joint and survivor annuities typically offer flexibility in how income is structured. You can choose to have the survivor receive 100%, 75% or 50% of the original payment amount, depending on your financial goals and budget needs. The higher the survivor benefit, the lower the initial payout will be. Selecting the right option involves balancing immediate income needs with long-term protection for your spouse.

This type of annuity often works best for married couples who want guaranteed, lifelong income that won’t end with one spouse’s death. It’s also well-suited for retirees who value stability and prefer not to manage market risk during retirement. However, it may not be ideal for individuals without dependents or those who want to maximize income solely during their own lifetime.

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.

Pros of a Joint and Survivor Annuity

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.

Cons of a Joint and Survivor Annuity

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

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

A joint and survivor annuity can serve as the backbone of a retirement income strategy, offering consistent payments that last for both you and your spouse’s lifetimes. By converting part of your savings into a guaranteed income stream, you can cover essential expenses like housing, healthcare and everyday living costs, no matter how long either of you lives. This reliability can provide stability even during market downturns, reducing the pressure on your other investments.

When incorporating a joint and survivor annuity into your broader plan, it’s important to consider how it fits alongside other income sources such as Social Security, pensions and investment withdrawals. The annuity can complement these by filling income gaps or replacing variable market returns with steady payments. This creates a more predictable income structure, helping you maintain your lifestyle without worrying about fluctuating investment performance.

You don’t need to invest your entire nest egg in an annuity to benefit from its guarantees. Many retirees use a portion of their assets, enough to cover fixed expenses, while keeping the rest invested for growth and liquidity. This balance allows you to enjoy dependable income while still having flexibility for emergencies, travel or legacy goals. A financial advisor can help calculate the right allocation based on your spending needs and life expectancy.

Bottom Line

A joint and survivor annuity offers couples a powerful way to ensure lifelong financial security and peace of mind in retirement. By providing guaranteed income that continues for as long as either spouse is alive, it helps protect against one of the biggest retirement risks, outliving your savings. While it may not offer the flexibility or growth potential of market-based investments, its strength lies in stability and predictability. When thoughtfully integrated into your overall retirement plan, a joint and survivor annuity can serve as a reliable foundation for lasting financial confidence.

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 a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel 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.