What Is a SPIA and Is It Right for Your Retirement?

If you need retirement income to start now — not in five years, not after a deferral period, but now — a Single Premium Immediate Annuity may be the most efficient tool available.

What Is a SPIA?

A Single Premium Immediate Annuity is exactly what the name says. You make a single lump-sum deposit, and income starts immediately — within 12 months, often the very next month.

The insurance company calculates your monthly payment based on: - Your age (and your spouse's age if using joint coverage) - The amount you deposit - The payout option you select - Current interest rates

Once set, the payment is fixed and guaranteed for life. It does not change based on markets, interest rates, or how the insurance company performs.

What Does It Actually Pay?

Payout rates vary by age, but as a general benchmark for a 70-year-old in New Jersey:

A $200,000 single life SPIA currently pays approximately $1,400 to $1,700 per month for life — roughly $16,800 to $20,400 annually.

That is a 8.4% to 10.2% annual payout rate on the deposit. A 75-year-old gets higher payouts because their expected payment period is shorter. A 65-year-old gets lower payouts for the same reason.

These are approximate figures. Actual rates vary by carrier and change with interest rates — always get a current illustration before deciding.

Payout Options

Life only: Maximum monthly payment. Income continues for as long as you live, then stops. Nothing passes to heirs.

Life with period certain: Income for life, but if you die before the period ends (commonly 10 or 20 years), payments continue to your beneficiaries for the remainder of the period. Slightly lower monthly payment.

Joint and survivor: Income continues for the life of both spouses. When the first spouse dies, the surviving spouse continues receiving income — either the full amount or a reduced percentage (often 50% or 75%). Popular for married couples who want neither spouse to be left without income.

Life with cash refund: If you die before receiving total payments equal to your deposit, the remainder is returned to your beneficiaries. Provides a floor on total payout.

The Trade-Off

The SPIA's strength is also its limitation. In exchange for the highest possible guaranteed monthly payout, you give up access to the principal. Once you annuitize, the lump sum is gone — converted into an income stream. You cannot change your mind and get it back.

This is why SPIAs are not the right fit for everyone. They work best when:

• You have other liquid assets for emergencies and are not depleting your last dollar
• You want to maximize guaranteed monthly income for a specific pool of money
• Income needs to start immediately — not in five years
• You are comfortable with the idea of converting assets to income stream

SPIA vs. FIA with Income Rider

Both create lifetime income. The key differences:

SPIA pays more per dollar if income starts immediately, but you lose access to the principal and flexibility to delay.

FIA with income rider lets you defer — during which your income benefit grows — while keeping access to your account value and flexibility to choose when income starts.

If you need income now and want the maximum payout, SPIA. If you have 5 to 10 years before you need income and want your money to keep growing, FIA with rider.

Neither is better universally — it depends entirely on your timeline.

If you want to see what a SPIA would pay with your specific deposit and age in New Jersey, reach out for a free illustration. These take about five minutes to generate and give you an exact number to evaluate.