Joint and Survivor Annuity
Income continues as long as either the annuitant or the joint annuitant (usually a spouse) lives, typically at a reduced amount after the first death.
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In a joint and survivor annuity, the provision that "payments reduce to two-thirds after the first death" means that:
The surviving annuitant receives two-thirds of the original payment amount after the first annuitant dies — A joint and survivor annuity pays income over two lives and continues for the surviving annuitant. The reduction feature specifies what percentage of the original benefit the survivor receives after the first death, commonly 100 percent, two-thirds, or 50 percent. A two-thirds option pays the survivor two-thirds of the amount the couple received while both were alive. Higher survivor percentages produce lower initial payments because the insurer expects to pay for a longer period.
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A joint and survivor annuity is designed to provide payments:
For as long as either annuitant is living, with payments continuing to the survivor, often at a reduced amount — A joint and survivor annuity covers two lives, typically spouses, and continues to make payments as long as either person is alive. Payments often continue in full or at a reduced percentage, such as two-thirds or one-half, after the first annuitant dies, so the survivor retains an income stream. Because payments may last for two lifetimes, the amount of each check is typically lower than under a single-life annuity, but the security for the couple is higher. This option is popular in retirement planning because it protects the surviving spouse against outliving the income.
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