Payout examples for immediate annuities
Each example shows a situation, the option that fits and the income it provides. These examples use made-up people, but the income ranges are realistic.
Lifetime with guaranteed period
Maria, 68, retired nurse
Best for: Leaving payments to beneficiaries
Scenario: Maria wants steady income she can count on. She also wants to make sure her child is provided for. She has $350,000.
Solution: She chooses a SPIA with a “life with a 10-year period certain” payout. This means payments are guaranteed for Maria’s lifetime and includes a 10-year guarantee that protects her child.
Outcome: Maria receives about $1,800 to $2,200 a month, or $21,600 to $26,400 each year. If she dies after 7 years, her child gets the same monthly income for the remaining 3 years of the guaranteed period.
Lifetime only
George, 70, retired engineer
Best for: Getting the most income each month
Scenario: George wants the highest income he can get. He has no one who depends on him. He has $300,000 saved.
Solution: He chooses a SPIA with a lifetime only payout. This option pays him for as long as he lives, and the payments end when he dies.
Outcome: George receives about $2,000 to $2,400 a month, or $24,000 to $28,800 a year. This option pays more than choices that include benefits for survivors.
Guaranteed period
Paul, 60, retiring from military service
Best for: Bridging income until Social Security
Scenario: Paul wants to wait until he’s 70 to claim Social Security so his monthly benefit will be higher. He needs a steady income to cover his living costs for those 10 years. He has $250,000 to use.
Solution: He chooses a SPIA with a 10-year guaranteed period payout. This option pays him the same monthly income for 10 years. If he dies before the period ends, his beneficiary gets the remaining payments.
Outcome: Paul receives about $2,500 a month, or $30,000 a year, for 10 years. When he turns 70, the annuity payments stop and his higher Social Security benefits begin.
Joint and survivor
Sylvie and David, both 70, retired teachers
Best for: Protecting a spouse's income
Scenario: Sylvie and David want to make sure the surviving spouse keeps getting the same income, no matter who dies first. They have $500,000 saved.
Solution: They choose a SPIA with a joint and survivor payout. This option pays them as long as either spouse is living, and the survivor gets 100% of the payment after the first spouse dies.
Outcome: Sylvie and David receive about $2,500 to $3,000 a month, or $30,000 to $36,000 a year. When one spouse dies, the other keeps getting the same monthly income for the rest of their life.