Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Joint and Survivor Annuity

What it is:

A joint and survivor annuity is an annuity with two named beneficiaries. The annuity provides both beneficiaries with recurring income for life.

How it works (Example):

Joint and survivor annuities, as the name suggests, serve a dual purpose. In addition to paying income benefits to two individuals simultaneously, they also continue these payments to the survivor once one of the beneficiaries dies. When this occurs, the annuity's issuer reduces the income payments to a fraction of the joint amount (usually by one-half or one-third).

For example, suppose Bob and Jane receive $2,000 each month from a joint and survivor annuity. If Bob dies, Jane would continue receiving monthly income of roughly $630–$1,000.

Why it Matters:

The structure of joint and survivor annuities makes them an ideal fixed income pension option for married couples.