Income Annuities

Turn your savings into a lifetime paycheck.

An income annuity can convert a portion of your retirement savings into a stream of income that may continue for your lifetime, depending on the product and contract you choose.

At Money Man 4 Integrity, we believe the decision should start with understanding how income annuities work, what they can provide, what you give up in exchange for guaranteed income, and which type may fit your retirement goals.

Explore Income Annuity Options → See the Main Types

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The basic income annuity framework

Retirement
Savings

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Income
Annuity

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Predictable
Income

An income annuity may complement Social Security, pensions, and other retirement assets as part of a broader retirement strategy.

What Is an Income Annuity?

Create a more predictable source of retirement income

An income annuity is an insurance contract designed to provide payments according to the terms of the contract.

Step 01

You provide a premium

You provide a premium to an insurance company, and in return the company provides income payments based on the option you select.

Step 02

You select an income structure

Payments may begin shortly after purchase or several years later. Some contracts can provide income for life, while others may use a specified payment period.

Step 03

You create another income layer

An income annuity can complement Social Security, pensions, and other retirement assets and may help address part of a retirement income gap.

The goal isn't necessarily to annuitize everything. It is to determine whether guaranteed income has a useful role in your retirement plan.

The Three Main Types

Three ways to create retirement income

Income annuities can be structured in several ways. Three important categories to understand are SPIAs, DIAs, and fixed indexed annuities with guaranteed lifetime withdrawal benefits.

Immediate Income

SPIA

Single Premium Immediate Annuity

A SPIA is designed to begin income payments relatively soon after the contract is purchased. Depending on the contract, payments may continue for life.

Lump-sum premium
Income can begin relatively soon
Single-life or joint-life options
Optional benefits may be available

Explore SPIA Options →

Deferred Income

DIA

Deferred Income Annuity

A DIA allows you to purchase an annuity today while postponing the beginning of income payments until a future date.

Purchase today
Income begins later
Useful for longer-term income planning
Future income depends on contract terms

Learn About DIAs →

Indexed Income

FIA + GLWB

Fixed Indexed Annuity with Lifetime Income Rider

A fixed indexed annuity with a Guaranteed Lifetime Withdrawal Benefit rider is another approach to creating lifetime income.

Index-linked interest crediting
Caps, participation rates and spreads
Guaranteed lifetime withdrawal benefit
Benefit base can differ from account value

Explore Fixed Indexed Annuities →

Immediate Income

Single Premium Immediate Annuity (SPIA)

A SPIA is designed to begin income payments relatively soon after the contract is purchased.

How it works

You provide a lump-sum premium
You select an income option
Payments may begin shortly after purchase
Payments can potentially continue for life
Single-life or joint-life structures may be available

Illustrative example

67-year-old retiree
$250,000 premium
Lifetime income option
Monthly payment begins relatively soon
Actual payment depends on contract and pricing

This example is for illustration only and is not a quote or guarantee.

Deferred Income

Deferred Income Annuity (DIA)

A DIA allows you to purchase an annuity today while postponing the beginning of income payments until a future date.

Purchase today

You purchase a deferred income annuity and establish the contract terms.

Choose a future income date

You select when you want income payments to begin, such as a later stage of retirement.

Create future guaranteed income

The eventual income depends on the premium, contract, age, income option, and other factors.

Illustrative example

Age 58DIA purchased todayIncome begins at 72

Planning role

A DIA can be considered as part of longer-term retirement income planning. The longer deferral period can affect eventual income, but actual results depend on the contract and applicable pricing.

Indexed Income

FIA with a Guaranteed Lifetime Withdrawal Benefit

A fixed indexed annuity with a GLWB rider may provide a contractual lifetime withdrawal benefit based on the terms of the rider.

Index-Linked Crediting

Interest can be credited based in part on the performance of a selected market index, subject to caps, participation rates, spreads, and crediting methods.

Lifetime Withdrawal Benefit

A GLWB rider may provide a contractual lifetime withdrawal benefit based on the terms of the rider.

Benefit Base vs. Account Value

The benefit base used to calculate withdrawals may be different from the actual account value. The benefit base is not necessarily money you can withdraw as a lump sum.

"Benefit base = account value"

The benefit base used for calculating guaranteed withdrawals can be different from the actual account value.

How Payments Are Calculated

What determines your monthly income?

The amount of income an annuity can provide depends on several factors.

Age

When income begins

Generally, the age at which income begins can affect the payment amount because the expected payment period differs.

Life Structure

Single life vs. joint life

A single-life option generally provides payments based on one individual's lifetime. A joint-life option can provide income based on the lifetimes of two people.

Contract

Optional benefits

Period-certain provisions, cash-refund features, death benefits, spousal continuation, inflation-related features, and guaranteed income riders can affect income and cost.

Premium

The amount placed into the contract can affect the income available.

Interest-Rate Environment

The applicable pricing environment can influence income amounts.

Insurance Company

Carrier pricing and contract design affect available income.

Compare the Complete Contract

The highest income quote isn't automatically the best contract

The monthly payment is only one factor when comparing income annuities.

Financial Strength

Consider the financial strength of the issuing insurance company and its ability to meet contractual obligations.

Contract Guarantees

Understand exactly what the contract guarantees and what provisions apply.

Income Duration

Review whether income is for life, a specified period, or subject to another structure.

Liquidity

Consider access to your money, surrender provisions, and whether you have sufficient liquid assets elsewhere.

Death Benefits

Review period-certain, cash-refund, beneficiary, and other death benefit provisions.

Inflation Features

Consider whether income can increase over time and what that feature may cost or do to initial income.

Honest Trade-Offs

Pros and cons of an income annuity

Income annuities can solve an important retirement problem, but they aren't designed for everyone.

Potential benefits

Guaranteed lifetime income under applicable contract terms
More predictable retirement paycheck
May help address the retirement income gap
Joint-life options may provide continuing spousal income

Potential drawbacks

Reduced access to the lump sum
Possible surrender restrictions or charges
Inflation can reduce purchasing power
Limited direct market upside for certain products
Guarantees depend on the insurer's claims-paying ability

Is an Income Annuity Right for You?

Who should consider a lifetime income annuity?

An income annuity may be worth exploring when predictable income and longevity protection are important parts of your retirement strategy.

01 Approaching retirement or already retired

02 Want a more predictable source of income

03 Social Security and pensions don't fully cover essential expenses

04 Concerned about outliving your savings

05 Have other liquid assets for emergencies

06 Comfortable exchanging some liquidity for contractual income

May Be Less Appropriate If

Maximum liquidity is your highest priority
You already have enough guaranteed income for essential expenses
You need all of the money for near-term spending
You don't have sufficient liquid assets outside the annuity
The strategy doesn't fit your overall retirement plan

The Income Floor

How income annuities can work with Social Security and pensions

The objective isn't necessarily to annuitize your entire portfolio. It is to determine whether guaranteed income has a useful role in your retirement plan.

Calculate essential expenses

Housing, utilities, food, healthcare, insurance, transportation, and other necessary expenses.

Calculate guaranteed income

Add Social Security, pension income, and other contractual lifetime income.

Identify the gap

If essential expenses are greater than existing guaranteed income, the difference is your potential retirement income gap.

Consider your options

An income annuity may be one possible way to address part of that gap.

Other retirement assets may provide flexibility for

GrowthTravelEmergenciesLarge purchasesFamily supportLegacy planning

Common Questions

Income Annuity FAQ

How much monthly income will a $100,000 income annuity pay?

There is no universal payout amount. Income depends on factors such as age, income start date, interest rates, insurance company, payout option, premium, and contract terms. The best way to determine an actual payment is to obtain a current quote for your specific circumstances.

Can I outlive my lifetime income annuity?

Certain lifetime income annuities are specifically designed to provide income for as long as you live, according to the contract terms. That's one of the primary reasons retirees consider lifetime income annuities.

What happens to the money if I die early?

It depends on the payout option and contract. Some income annuities may include period-certain, cash-refund, or beneficiary provisions. These features can affect the amount of income you receive.

Are income annuities safe?

Annuities are insurance contracts, and their guarantees are backed by the claims-paying ability of the issuing insurance company. They are not FDIC-insured bank deposits. The financial strength of the insurance company is therefore an important consideration.

Is an income annuity the same as a pension?

They can provide similar types of predictable lifetime income, but they are not the same thing. A pension is generally an employer-sponsored retirement benefit, while an income annuity is an insurance contract purchased from an insurance company.

Can an income annuity protect me from market downturns?

Certain income annuities can reduce your dependence on market performance for the income they provide. However, different annuity types have different risks and features. A fixed indexed annuity, SPIA, and variable annuity should not be treated as identical products.

Does a lifetime income annuity keep paying if I live to 100?

A lifetime income option can continue paying for as long as you live according to the contract. This is one of the key ways an income annuity can address longevity risk.

Can I add my spouse to an income annuity?

Many products offer joint-life income options. A joint-life option can continue payments based on the lifetimes of both spouses according to the contract. The income amount may differ from a single-life option.

What's the difference between a fixed income annuity and a variable annuity?

A fixed income annuity is generally designed around contractual income payments and specified guarantees. A variable annuity typically has investment options whose values can fluctuate with market performance. They serve different purposes and have different risks, costs, and features.

Ready to Explore Lifetime Income?

Turn part of your retirement savings into a more predictable income stream.

An income annuity may help create a retirement income floor that works alongside Social Security, pensions, and your other retirement assets.

Explore Income Annuity Options →Contact Money Man 4 Integrity

FREE TO EXPLORE — NO OBLIGATION

Important Information. The information provided on this page is for general educational purposes only and is not personalized financial, investment, tax, legal, or insurance advice.

Annuity income, guarantees, benefits, fees, surrender periods, withdrawal provisions, death benefits, income riders, and other features vary by product, insurance company, state, and individual circumstances.

Illustrative examples are not quotes, guarantees, or predictions of actual income.

Annuity guarantees are subject to the claims-paying ability of the issuing insurance company. Annuities are not FDIC-insured bank deposits.

Before purchasing an annuity, carefully review the applicable contract and disclosures and consider consulting qualified financial, tax, and legal professionals regarding your individual circumstances.