The “Joint and Survivor” option on annuities generally provides an income guarantee for the owner and his/her spouse.

This option can be applied to an IRA or qualified plan, even though that can only have one owner. Payments from an annuity, even if it is part of a qualified plan or IRA which can only technically have one owner, can be based on two annuitants.

This will usually be a married couple, and it ensures that either spouse will receive payments from the annuity, even if one pre-deceases the other. Sometimes the survivorship payout is only a percentage of the original payout, such as 50% or 70%, but this is agreed upon by the annuitants at the time of application, and cannot be changed arbitrarily by the company or the annuitants.

The payout rate, even while both are alive, will be affected by the survivorship provision selected. Sometimes married couples do not choose this option, and instead choose simply a Life with Cash Refund, or a Life with (x) Years Certain option, but we would advise that the joint life option usually will hold the most value of these options.

The chance of at least one spouse living to a ripe old age is actually very strong, and many people underestimate how great those chances are and how long retirement can last. The value proposition with lifetime income annuities is that they are almost the only option available to investors which will guarantee that money will last as long as the client (or the spouse in this case) is alive.

That argument may partially be an emotional one, but it holds water in many cases, especially when retired couples face unforeseen expenses which deplete their retirement nest-egg.

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