As a married couple, determining how your retirement funds will last throughout both lives is of primary concern. Some couples turn to joint and survivor annuities as a potential solution; such investments are offered by some employers as part of their retirement plans, or through private insurance companies; it’s important that both partners involved understand all tradeoffs before committing to such products or others like them.
An annuity‘s primary purpose is to provide income for life – either as a single lump sum payment during your lifetime or through ongoing payouts after death. When purchasing an annuity, payment options vary and your selection will determine both how much and for how long income will come through.
One of the more popular annuity payment options is known as a qualified joint and survivor annuity (QJSA), typically used by employees in traditional pension plans and offering monthly payments to both you and your spouse throughout their lives. After your death, they continue receiving these payments though at reduced amounts as would occur under single life annuity plans.
Non-qualified joint and survivor annuities offer less attractive returns than qualified annuities, paying a lower rate of return with no protection from market risk built into them. If you decide on this route, be prepared to invest your money wisely so as to provide optimal returns in accordance with your specific circumstances.
When purchasing a non-qualified annuity, your payments may be adjusted based on principles outlined by the federal Employee Retirement Income Security Act.
An additional consideration when deciding to purchase a joint and survivor annuity is divorce. Most states view an annuity contract as marital property that can be split or offset during a divorce proceeding, so if there’s any chance that there could be divorce in your future it might be better to create a retirement plan that maximizes savings rather than go down annuity route. An experienced advisor can help create such plans which include any necessary provisions such as annuities if appropriate to your needs; then work with an annuity broker to select suitable annuities between both partners.