Table of Contents

Joint and Survivor Annuity

Stan Haithcock
October 1, 2023
Joint and Survivor Annuity

Hi there. Once again, Stan, The Annuity Man, America's annuity agent, licensed in all 50 states. Why does that matter? Because the state you're sitting in is beautiful, but if you decide to become a client of Stan, the Annuity Man's, we can do that. Why? Because I'm licensed in all 50 states. Today's topic is about joint and survivor annuities. We're going to talk about this and more. Remember the television series Survivor? This is Annuity Survivor. Can you make it through the gauntlet? Can you do it? Yes, you can.

‌All right, so I went off this Survivor thing. My daughter loves Survivor, so she made me watch it once, and I didn't get it. There are strategies to be mean to people and get them. I don't understand that, but maybe that's a direct reflection of the United States of America. It's a little gamey out there.

‌Joint and survivor annuity, what does that mean? That means that you have a spouse you love that's put up with your crap for a long, long time, and you want to create a lifetime income stream that will pay each of you as long as you are breathing. In most cases, the annuity companies are betting on the female. It's an evil plot. We can go into that in another video. I tell my wife all the time it's an evil plot.

‌Customize the Strategy

‌Females are going to live longer than males, but joint and survivor is important because when you die male, in this case, let's take the example of a male, and your spouse is still surviving. The income stream continues uninterrupted and unchanged for the rest of their life. Now, when they die, depending on how you structure the annuity will determine what happens to that remaining amount. Remember, joint and survivor annuities, joint and survivor lifetime income is a transfer of risk solving for longevity risk, meaning as long as you live. And annuities are the only product type that does that. Yes, Social Security does that as well. It's the best inflation annuity on the planet. Why? Because it's going to pay as long as you're breathing. But joint and survivor annuities are important because you could set up joint life only, which will be the highest payout. But when the second spouse dies, money goes poof. But you don't have to do that. You can say joint and survivor and cash refund. In other words, you die money continues uninterrupted and unchanged for the spouse. When the spouse dies, whatever's left in the account goes 100% to the list of beneficiaries of the policy. Or if you want to do a period certain, you can do that as well. But the bottom line is that you can customize the strategy. If you don't want the evil annuity company to keep a penny but want them to be on the hook to pay for both lives, you can do that. You can structure it in a myriad of ways. You have to tell us what you want to happen, all right?

‌But joint survivor is very important and a lot of times, when you leave a company that has some type of a pension setup, they're going to offer you a joint and survivor quote for them to keep the money and pay you. What I encourage you to do under that joint survivor situation is have us do an apples-to-apples quote with all carriers so you can choose the highest contractual guarantee. Spoiler alert: under the joint and survivor that the companies are typically offering. Those are higher than what the street's offering. Why? Because that company wants to keep the money, but you have to look at joint survivor as a pension.

‌Period Certain

‌Another way to do joint and survivor without it being a lifetime income stream is, say, "Stan, I don't really want to do that, but I want to make sure that me and me and the spouse are going to get paid for a specific period of time." You might say, we don't want the joint and survivor lifetime income. We want a period certain for 20 years or 25 years, ten years or 30 years. What does that mean? It's a lifetime income stream for that specific period of time that you chose. So, let's just say you said, "Okay, Stan, forget joint and survivor, we want a period certain for 25 years." In essence, that's a joint policy, meaning that if you died and the spouse is still alive, they will get the remaining payments for those 25 years. But when the spouse dies, the beneficiaries will get paid if there's time left on that 25-year time horizon. What I want you to take away from joint survivor, because that's a phrase thrown around like "Joint period certain, 20-year period certain, joint with period certain to 20 years." Most advisors just reflex and give you those stupid comments. They don't know what they're talking about. Joint survivor is important because, in a world where companies don't offer pensions and the only pension that you have, the pension type annuity is Social Security. And maybe you are fortunate to have a pension from, say, a government job or a company, one of the 9% of the companies that offer pensions or a good labor union, etc., and you have a pension, you might need additional income to fill in that income floor. Nod your head. But you want to make sure that your spouse is going to be a participant in that and that the income stream is not going to be lowered and it's going to be a hundred percent to them.

‌Lessening That Amount

‌Now, let's talk about that lowering. Some people say, "Well, wait a minute, Stan The Annuity Man. I want it, I have it. Set it up so that I want joint survivor with 50%." You can do joint survivor with a hundred percent, meaning the income stream will be the same for your spouse after you die. Or you could say, I want joint survivor, 50%. What does that mean? Stan The Annuity Man. What that means is when you die, your spouse will get 50% of that income stream for the rest of their lives. Why would you do that? You might do that because you have different income streams hitting at different times. You have rental properties, whatever it is. You can customize it, and we did one the other day. Joint survivor is 75%. We've done joint and survivor of 50%. But what I encourage you to do, most of my clients, I'm going to bully you a little bit and say, "Hey, why are you doing that? Why are you lessening that amount?"

‌Because in the world I live in with the lovely Miss Christine Annuity Man, that's her last name, Christine Annuity Man doesn't care about investments. She doesn't care about anything, probably really doesn't care about me. All she cares about are the kids and the grandkids and the fact that money will hit the account uninterrupted and unchanged when my rented Learjet hits the mountain. That's all she cares about. I encourage you as the spouse, and if you're reading this, you're probably the person who manages the money for the family and makes those decisions. You'll get a lesser payout with joining a hundred percent, but I will encourage you to nudge a little bit. Maybe that's how to do it because you're setting up a lifetime income stream for both lives.

‌Longevity Risk

‌Hey, by the way, we talked about period certain, that 25-year period certain thing I was telling you about that contract. I mean, that's not a joint life contract. In other words, if you bought it with your IRA money, you could have your spouse as the primary beneficiary. Somebody will get 25 years of payments, whether it's you or somebody you list as a beneficiary. That's not a joint and survivor. But theoretically, you can think of it like that because some people are in their seventies and say, "You know what? I want a 20-year period certain, or I want a 25-year period certain." They don't have longevity in their family. They might think they're going to live ten more years, but they want to make sure that there's payments coming when they're in the grave, and they want to make sure that they can have payments going to either their spouse or their kids or their grandkids.

‌Highest Contractual Guarantees

‌Period certain makes sense in specific situations, something we need to talk about. But in my opinion, if you're doing joint and survivor, I would be doing the transfer of risk to solve for longevity risk, outliving your money, and have a life contingency for both lives, joint and survivor 100%. The other thing I want to talk about is Immediate Annuities. When you buy Immediate Annuities and do the joint and survivor, understand that you have to quote all carriers for the highest contractual guarantee. Do not allow someone, hopefully you're going to use us, but let's just say your brother-in-law is in the annuity business, and you have to use them, or else you can't go to the Christmas dinner.

‌Do not have them quote one, two, or three carriers. And with some of these big companies, I'm not going to name them because you know who they are. And they offer annuities, but they only offer five, six, or seven carriers. Listen, when you're buying joint and survivor annuity guarantees, lifetime income, you need to shop all carriers for the highest contractual guarantee. You can do that at our site. Use our SPIA or DIA calculators depending on what product type you need, but quote all carriers and understand that these quotes are like a gallon of milk every seven to 10 days they expire. You lock them in during the application process. That's not a sales pitch; that's just a fact. That's how you lock them in. But you can't get a quote and then a month later say, "Well, you know that quote that I got from X, Y, Z a month ago, that's the one I want." It doesn't work like that player. Buying joint and survivor type, lifetime income products, and commodity products is like buying a plane ticket. Fortunately, at The Annuity Man, we represent almost every carrier out there.

‌Let's cover one more thing. If you have an annuity like a Variable or an Indexed or Multi-Year Guarantee Annuity. Something that's deferring and you make the decision that you want to convert that to a joint and survivor, a hundred percent payout annuity, in essence, turn it into an Immediate Annuity. We're going to have to quote that carrier that you're currently with, and then we'll quote all carriers outside of that to ensure that you get the highest contractual guarantee. Some of the time, the company that you're with will provide the highest joint survivor quote. Sometimes they won't. If they do not, we can transfer the non-taxable event to the highest contractual guarantee.

‌The bottom line with joint and survivor is that you need to engage with us at our site. Run quotes there and interact with me and my team of experts. I was going to say financial experts, but they're actually annuity experts. They know the stuff backwards and forwards just like I do. But I encourage you to help set that up, customize the quote, explain the details, and explain the choices available because this is a big-time choice. You're setting up a pension for your family, right? Exactly. And with that, I'll see you on the following Stan The Annuity Man blog.

Never forget to live in reality, not the dream, with annuities and contractual guarantees! You can use our calculators, get all six of my books for free, and most importantly book a call with me so we can discuss what works best for your specific situation.

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