Annuity option that pays retirement income based only on one person’s life, usually the retiree, with payments ending at death.
A Single-Life Annuity is one of the most common payout options in pensions and retirement plans. It provides guaranteed income for as long as one specific person lives—typically the retiree. Once that person passes away, the payments stop, even if a spouse or other dependents are still alive. Because the benefit is calculated using only one person’s life expectancy, monthly payments are usually higher than options that cover two people.
This type of annuity is widely used in defined benefit pension plans, traditional annuities, and some retirement income products. Understanding how it works can help you decide whether it fits your retirement needs.
How a Single-Life Annuity Works
With a Single-Life Annuity, the retirement plan or insurance company calculates monthly payments based on factors related to just one individual, such as:
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Age at retirement
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Gender (in some plans, depending on regulations)
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Total pension benefit or account value
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Expected lifespan using actuarial tables
Because the plan only expects to make payments during one person’s lifetime, the risk to the plan is lower. As a result, the retiree receives a larger monthly benefit compared to annuity options that continue payments to a surviving spouse.
For example, if two retirees have identical pension balances, the one who chooses a Single-Life Annuity may receive noticeably higher monthly income than someone who selects a joint and survivor annuity.
Real-Life Example
Imagine Mark retires at age 65 with a pension that offers multiple payout options. If Mark chooses a Single-Life Annuity, he might receive $2,200 per month for the rest of his life. However, if he instead chooses a joint and survivor annuity that continues payments to his spouse after his death, the monthly benefit might drop to $1,900.
The higher payment from the Single-Life Annuity reflects the fact that payments stop when Mark dies, regardless of how long his spouse lives afterward.
Key Advantages of a Single-Life Annuity
A Single-Life Annuity can be attractive for certain retirees, especially those who prioritize maximizing monthly income. Common benefits include:
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Higher monthly payments compared to survivor-based options
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Simple structure that is easy to understand
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Guaranteed lifetime income for the retiree
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Often the default option in many pension plans
This option can work well for individuals who are single, widowed, or confident that their spouse has other income sources.
Important Risks and Limitations
While a Single-Life Annuity provides higher income, it also comes with trade-offs that should be carefully considered:
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Payments stop at death, leaving no ongoing income for a spouse or beneficiary
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No death benefit unless combined with special features (which may reduce payments)
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Less flexibility compared to lump-sum or period-certain options
For married retirees, choosing a Single-Life Annuity usually requires spousal consent under U.S. pension rules, because it removes survivor protection.
Single-Life Annuity vs. Other Annuity Options
A Single-Life Annuity is different from other common retirement payout choices, such as:
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Joint and survivor annuity, which continues payments to a surviving spouse
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Period-certain annuity, which guarantees payments for a fixed number of years
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Lump-sum distribution, which pays the entire benefit at once
Each option balances income level, longevity risk, and family protection differently. Choosing the right one depends on your personal situation and financial goals.
Why This Choice Matters in Retirement Planning
Selecting a Single-Life Annuity is a major retirement decision because it directly affects both your lifetime income and your family’s financial security. Retirees with no dependents may value the higher monthly income, while those with spouses often prefer options that provide long-term protection for loved ones.
In simple terms, a Single-Life Annuity offers maximum income for one lifetime—but no income beyond it. Understanding this trade-off is essential when comparing pension payout options and planning for a secure retirement.
