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Smart Annuity Income Planning Explained

People often assume that once you buy an annuity, you’ve locked in a decision forever. This belief typically stems from how Single Premium Immediate Annuities operate. That product, which has been around since the Roman Empire, requires you to hand over a lump sum to an insurance company in exchange for a guaranteed lifetime income stream. And yes, once you buy that, you can’t undo it.
But here’s the thing: not all income planning has to be done today. In fact, for many people, the smartest move is to wait until the right moment. That’s where “keeping your powder dry” comes into play. You don’t have to commit to a lifetime income stream right now — you can structure things so you pull the trigger only when you need it.
Lifetime Income Stream Planning
Many people believe that retirement income planning is a one-time decision. However, the reality is that you can create a flexible plan that adjusts to your life circumstances. Lifetime income annuities — whether for single or joint life — guarantee payments for as long as you live.
The question is: When should you start? Some want income right away, similar to starting Social Security or turning on a pension. Others prefer to wait because they have other income sources or investments working for them. The older you are when you begin an annuity income stream, the higher the payout. Why? Because these products are priced primarily on life expectancy, the shorter the life expectancy, the higher the monthly amount.
The Braveheart Strategy
Think of the movie Braveheart, where Mel Gibson is yelling “Hold!” as the enemy charges. That’s you, holding your funds in place, waiting for the right moment to strike. If your portfolio is doing well and you don’t need the income yet, there’s no rush to hand over your money to an annuity company. Waiting can result in a bigger guaranteed payment later.
Flexibility Through Laddering and Planning Ahead
One strategy for keeping your powder dry is laddering. Instead of buying one large annuity now, you purchase smaller annuities over several years. This spreads your entry points and can capture higher payouts as you age.
Another overlooked option is to set up instructions in your trust or estate plan so that when you pass away, your spouse can automatically use a portion of the inheritance to purchase an Immediate Annuity. This ensures they have guaranteed lifetime income without you locking up the money now.
Shopping for the Best Deal
Annuities are commodity products. A Single Premium Immediate Annuity, Deferred Income Annuity, or Qualified Longevity Annuity Contract should always be shopped across all carriers for the highest contractual guarantee. Rates change every 7–10 days — much like airline ticket prices — so timing and shopping around matter.
Alternatives to Immediate Lifetime Income
If you want to keep your money intact while generating some income now, a Multi-Year Guarantee Annuity (MYGA) is worth a look. MYGAs function similarly to bank CDs issued by insurance companies. Your principal remains intact, interest is credited annually, and in many cases, you can withdraw the interest without affecting your principal. At the end of the term, your full original deposit is still there.
Using Income Riders for a Delayed Start
Another great keep-your-powder-dry option is attaching an Income Rider to a Fixed Indexed Annuity. With an Income Rider, you lock in a future lifetime income guarantee — often 5, 10, or more years down the road — while keeping access to your accumulation value if your plans change.
We always focus on the contractual guarantee of the rider, not the sales pitch about “market upside.” You’ll know in advance exactly how much lifetime income you’ll get if and when you decide to start.
Why Flexibility Matters
The keep-your-powder-dry strategy gives you control over timing. You can let other parts of your portfolio work, only committing to an income annuity when it’s the right move. This can be especially valuable if interest rates rise or your income needs change unexpectedly.
Conclusion
If you want to lock in guaranteed lifetime income today, you can use a Single Premium Immediate Annuity, Deferred Income Annuity, or Qualified Longevity Annuity Contract. However, if you value flexibility and want to maintain control, strategies such as MYGAs, laddering, or Income Riders allow you to delay the start while still maintaining guarantees in place.
At The Annuity Man, we quote all carriers to find the best contractual guarantee for your situation. Whether you’re ready to lock in income now or prefer to keep your powder dry, we’ll help you find the right approach.