Income Annuities

We typically recommend people shy away from investments promising any type of "guarantee." However, income annuities (sometimes referred to as "immediate annuities" or "deferred income annuities," depending on when income payments begin) do offer a predictable guaranteed stream of income that you can't outlive. As with any investment, though, there are trade-offs.

With an income annuity, you give the insurance company a lump sum in exchange for a guaranteed stream of income. Once the money is given to the insurance company, you generally no longer have access to it. Therefore, income annuities are usually best suited for investors who want to maximize their income.

5 key features to consider with an income annuity

  1. Income payments - Generally, these remain level over time, and they can begin immediately or two to seven but no more than 10 years in the future.
  2. Flexibility - Generally, these remain level over time, and they can begin immediately or two to seven but no more than 10 years in the future.
  3. Taxes - Some income annuities may offer tax-advantaged income when payments are considered part return of principal and part interest.
  4. Income payment options - You or your beneficiary can receive income payments throughout your life or for a set period of time. Depending on the income payment option you select, your beneficiary may receive a death benefit should you pass away.
  5. Fees & expenses - While there are not specific fees or expenses taken out of the income payments you receive, the insurance company does factor fees and expenses into the income payment. Fees and expenses generally cover the insurance company’s administrative expenses, the cost of offering income payments for life or for the chosen period, and profits to the insurance company and agent.

How we can help

An income annuity may be the right choice for you if you have a need for guaranteed lifetime income; you know your retirement expenses won't be covered by other income sources, such as Social Security; and you have assets outside of the annuity to cover unexpected expenses. Talk to your financial advisor to determine if an income annuity may help you meet your retirement income needs.

Important Information:

Guarantees are subject to the claims-paying ability of the issuing company.

Edward Jones, its employees and financial advisors are not estate planners and cannot provide tax or legal advice. You should consult your estate-planning attorney or qualified tax advisor regarding your situation.

Edward Jones operates as an insurance producer in California, New Mexico, and Massachusetts through the following subsidiaries, respectively: Edward Jones Insurance Agency of California, L.L.C., Edward Jones Insurance Agency of New Mexico, L.L.C., and Edward Jones Insurance Agency of Massachusetts, L.L.C.

Edward Jones receives payments known as revenue sharing from certain mutual fund companies, 529 plan program managers and insurance companies (collectively referred to as “product partners”). For more information see Revenue Sharing Disclosure.

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