Secure lifelong income for you and your loved one with a Joint-and-Survivor annuity, a popular retirement plan option.
A Joint-and-Survivor (J&S) Annuity is a type of retirement annuity designed to provide steady, guaranteed income not only for the participant but also for a spouse or another designated beneficiary. Unlike a standard life-only annuity, which stops payments when the participant passes away, a J&S annuity continues payments to the beneficiary for the rest of their life. This makes it an attractive choice for retirees who want to ensure financial security for a surviving spouse.
How a Joint-and-Survivor Annuity Works
When you purchase a J&S annuity, the plan typically pays a fixed monthly benefit to you for life. After your death, a portion of that benefit—commonly 50%, 75%, or 100%—is paid to your beneficiary. For example:
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If a retiree receives $2,000 per month and selects a 50% survivor option, the spouse would receive $1,000 per month after the retiree’s death.
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With a 100% survivor option, the spouse continues receiving the full $2,000 monthly.
This feature is particularly valuable for couples where one partner depends heavily on the other’s retirement income. It provides peace of mind that the survivor’s standard of living will not drop dramatically if the primary earner passes away.
Key Features and Considerations
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Fixed monthly payments: The participant receives predictable, stable income during retirement.
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Survivor benefit: Payments continue for the lifetime of the designated beneficiary.
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No replacement beneficiary: If the beneficiary dies before the participant and payments have already started, the participant usually cannot name a new beneficiary, and the monthly benefit typically stays the same.
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Choice of survivor percentage: Selecting a higher survivor benefit (like 100%) usually reduces the participant’s monthly payment compared to a lower survivor percentage (like 50%).
Real-Life Example
Consider Sarah and John, a retired couple. John chooses a J&S annuity with a 75% survivor benefit. John receives $3,000 per month for life. If John passes away first, Sarah will receive $2,250 per month for her lifetime. This helps Sarah maintain her lifestyle without worrying about sudden income loss.
Benefits of a Joint-and-Survivor Annuity
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Financial security: Guarantees income for both the participant and the beneficiary.
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Peace of mind: Eliminates the uncertainty of how the surviving spouse will cover living expenses.
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Predictable budgeting: Fixed monthly payments make it easier to manage retirement finances.
Things to Keep in Mind
While J&S annuities are valuable, there are trade-offs: choosing a higher survivor benefit lowers your initial monthly payment. Additionally, once payments have started, your ability to adjust the plan or switch beneficiaries is limited. It’s important to balance the monthly income you need now with the security you want for your loved one.
A Joint-and-Survivor annuity is a practical tool for retirees who want guaranteed lifetime income for themselves and their spouse. By understanding how the benefit works and choosing the right survivor percentage, you can protect your retirement income and provide lasting financial security for your loved one.
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