Guaranteed Income

Income Annuities

Convert a lump sum into a guaranteed paycheck you can never outlive — no matter what the market does.

6 min read · By Brandon Rickrode, Licensed Retirement Specialist

The simplest description

An income annuity does one thing: it turns a lump sum of money into a guaranteed stream of income — monthly, quarterly, or annually — for the rest of your life.

You hand the insurance company a check. They hand you a paycheck every month for as long as you live. Even if you live to 110. Even if the market crashes. The income never stops.

This is the closest thing most people can get to a pension if they don't have one through their employer.

The two main types

Immediate Income Annuity (SPIA)

You deposit money and income starts within 30 days to 12 months. Best for people who are already retired and need income now. "SPIA" stands for Single Premium Immediate Annuity.

Deferred Income Annuity (DIA)

You deposit money today, but income starts at a future date you choose — often 5, 10, or 15 years from now. Because you're deferring, the future income amount is significantly higher. Also called a "longevity annuity."

A real-world example

A 65-year-old deposits $150,000 into a SPIA. Here's what the income might look like:

Deposit$150,000

Monthly income (life only)~$850/mo

Monthly income (joint life, spouse age 63)~$760/mo

Monthly income (life + 10-year guarantee)~$820/mo

Annual income (life only)~$10,200/yr

Approximate figures based on current market rates. Actual quotes vary by carrier and timing.

Payout options explained

When you set up an income annuity, you choose how the income is structured:

Life only: Highest monthly payment. Income stops when you die. Best if you have no dependents and want maximum income.

Joint life: Income continues for a surviving spouse after you pass. Slightly lower payment, but protects your partner.

Life with period certain: Income is guaranteed for a minimum number of years (e.g., 10 or 20). If you die early, payments continue to your beneficiary for the remainder of the period.

Cash refund: If you die before receiving back your full deposit, the remaining balance goes to your beneficiary.

The trade-off to understand

Income annuities are not liquid. Once you hand over the money, it's converted to an income stream — you generally can't get the lump sum back. This is why most people use them for a portion of their savings, not all of it.

A common approach: use an income annuity to cover essential expenses (housing, food, healthcare), and keep other savings in more flexible accounts for discretionary spending and emergencies.

Who is this right for?

Retirees who want to cover essential monthly expenses with guaranteed income
People without a pension who want to create their own "paycheck"
Anyone worried about outliving their savings
Those who want to simplify retirement — no market watching, no withdrawal decisions

Ready to see what your income could look like?

I'll pull quotes from multiple carriers and show you exactly what a guaranteed income stream would look like for your situation.

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