What is Joint and Survivor Annuity?
A joint and survivor annuity pays income for as long as either of two annuitants is alive. Most often used by married couples, the contract continues paying the surviving spouse after the first death – either at the same level (100% joint and survivor) or at a reduced level (50% or 75% joint and survivor) for the rest of the survivor’s life.
How Joint and Survivor Payments Are Calculated
Because the carrier is taking on two life expectancies instead of one, the starting payment is lower than a single-life annuity would provide. A 65-year-old couple buying a $100,000 SPIA might receive $480/month for 100% joint and survivor, $520/month for 50% joint and survivor, or $580/month for a single life. The exact reduction depends on both ages and the survivor percentage selected.
When Joint and Survivor Makes Sense
Joint and survivor is often the right choice when both spouses depend on the income. The reduced starting payment is the cost of guaranteed income for the survivor’s full lifetime. If the surviving spouse has other secure income (pension, Social Security, separate retirement assets), a single-life payout with a period certain may produce more total income with less waste.
