How to Select Annuity Payments

Your annuity was probably meant to ensure a comfortable retirement period for you and, if you are married, your spouse. However, how you choose to receive the money from your annuity can make a huge difference in its performance and your ability to count on the financial safety it was intended to provide. In order to select annuity payments, you need to first consider a number of crucial details.


  1. Image titled Select Annuity Payments Step 1
    Determine the annuity's purpose.
    • It may have been created to provide for a vacation house, extended travel or as part of your retirement income.
    • A lump sum annuity payment may help you save a significant amount in mortgage interest if you will be using it for a major purchase like a house.
    • You will probably prefer monthly annuity payments if you will be using it as income and have grown accustomed to a monthly or biweekly paycheck.
  2. Image titled Select Annuity Payments Step 2
    Consider your other sources of income and your typical expenses.
    • For instance, taking a quarterly distribution may be more appropriate for your needs if you itemize on your federal income tax returns and pay quarterly taxes.
    • Those who have multiple retirement income streams such as other investments, Social Security benefits or rental property income may choose quarterly or biyearly annuity payments for traveling or property maintenance and repair.
  3. Image titled Select Annuity Payments Step 3
    Decide what will happen to any remaining balance upon your death.
    • You may be able to choose a joint-and-survivor annuity payment option if you are married. This will bequeath the balance to your surviving spouse.
    • You may be able to earn enough interest on your invested annuity so that the principal will remain untouched. This will indicate that you are only drawing off the earnings in the form of a yearly annuity payment. In this case, you may want to put the annuity into a trust for your heirs.


  • Schedule an appointment with a qualified investment adviser before you make important decisions about your retirement and investment accounts. The adviser will be able to help you look at all relevant variables and arrive at the best annuity payment solution for your situation.


  • Beware of "cash now" programs that offer cash up front in exchange for your deferred annuity. While you may be able to access your money quicker, you will definitely have much less of it in the long run. These programs are notoriously poor bargains for consumers and are not the same as choosing a lump sum annuity.

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