By Brent Matthew
You bought an annuity to create reliable retirement income. But what if you could squeeze more money out of that contract without taking on additional risk?
Most insurance companies won’t volunteer this information. After all, higher payouts for you mean less profit for them. But there are legitimate strategies that can boost your annuity income—sometimes significantly.
Here are three approaches worth considering.
1. Delay Your Payments (If You Can Afford To)
This sounds counterintuitive, but waiting to start your annuity payments can dramatically increase your monthly income.
Think of it like Social Security. The longer you wait, the bigger your check becomes. With a deferred annuity, each year you delay can increase your payout rate by 5-8% or more, depending on your contract and current age.
Let’s say you’re 65 with a $300,000 annuity. Starting payments immediately might get you $1,500 monthly. Wait until 70? That same annuity could pay $2,100 or more per month for life.
The math is simple: the insurance company expects to pay you for fewer years, so they can afford to pay you more each month. If you have other income sources to cover your expenses for a few more years, delaying can pay off handsomely.
Of course, this strategy only works if you’re healthy enough to reasonably expect those extra years of payments. There’s no point delaying if you need the income now or have health concerns that might shorten your life expectancy.
2. Consider a Lifetime-Only Payout Option
Most people choose annuity options that include a death benefit or guaranteed payment period. These features protect your heirs if you die early. But they also reduce your monthly income.
A straight lifetime-only annuity (also called a “life only” option) pays you more each month because there’s no death benefit. When you die, payments stop. Period. The insurance company keeps whatever’s left.
This might sound scary, but let me explain. If your primary concern is maximizing income during your lifetime, and you have other assets to leave your heirs, this option can boost your payments by 10-20% or more.
This works especially well if you’re single or if both you and your spouse have separate income sources. It’s less appealing if your spouse will depend on that income after you’re gone.
Before making this choice, compare the extra monthly income against what you’d be giving up in death benefits. Sometimes the trade-off makes sense and sometimes it doesn’t.
3. Split Your Annuity Into Multiple Contracts
Here’s a strategy we often use with our clients but insurance companies rarely mention: annuity laddering.
Instead of putting all your money into one annuity with one start date, you split it across multiple contracts with staggered payment start dates.
Why does this help? Two reasons.
First, it gives you flexibility. You can start some income now while letting other contracts grow. Second, it can potentially increase your overall payout rates as you age. A 70-year-old gets better rates than a 65-year-old.
For example, you might put $100,000 into an immediate annuity starting now, another $100,000 into one that starts in five years, and a third $100,000 into one starting in ten years. The later annuities will have higher payout rates when they kick in.
This approach also protects you against interest rate changes. If rates rise in the future, your later annuities can take advantage of better terms.
The downside? More contracts means more paperwork and administrative hassle. But if you’re comfortable managing multiple accounts, the extra income can be worth it.
Increase Annuity Income Instead of Leaving Money on the Table
Insurance companies aren’t going to proactively tell you how to get more money from your annuity. That’s not their job. Their job is to manage risk and maximize their profits.
Your job is to understand your options and make informed decisions. The strategies above aren’t loopholes or tricks; they’re legitimate ways to optimize your annuity for your specific situation.
Before making any changes, review your existing contract carefully. Some annuities have surrender charges or other restrictions that might limit your options. And consider working with a fiduciary financial advisor who can analyze your complete financial picture.
Your annuity should work as hard for you as you worked for the money you put into it. Sometimes that means pushing back against the default options and demanding better terms. Interested in guidance? Schedule a complimentary financial coaching session by calling (480) 247-9090, emailing info@SWAFirm.com, or booking directly at calendly.com/BrentMatthew.
Frequently Asked Questions About Increasing Annuity Income
Can I increase my annuity payments after I’ve already started receiving them?
Generally, no. Once you’ve started receiving payments from an annuity, your payout rate is locked in. That’s why it’s so important to explore your options before you begin taking distributions. However, if you have multiple annuities or haven’t started payments yet, you can still use strategies like delaying payments or choosing a lifetime-only option to boost your income. Some contracts may allow exchanges or modifications during specific windows, so review your policy or talk to your financial advisor about what’s possible with your specific annuity.
How much more income can I get by choosing a lifetime-only annuity option instead of one with a death benefit?
A lifetime-only annuity typically pays 10-20% more per month compared to options that include death benefits or guaranteed payment periods. The exact increase depends on your age, gender, the insurance company, and current interest rates. For example, if a joint-and-survivor annuity would pay you $1,500 monthly, a lifetime-only option might pay $1,650-$1,800 instead. The trade-off is that when you die, payments stop completely with no benefits for your heirs.
What’s the best age to start taking annuity payments for maximum income?
There’s no universal “best” age, but delaying payments typically increases your monthly payout by 5-8% or more for each year you wait. Many people see significant jumps in payout rates between ages 65 and 70. However, the right age depends on your health, life expectancy, other income sources, and when you actually need the money. If you’re healthy and have other retirement income to cover expenses, waiting until 70 can maximize your lifetime monthly payments. If you need income now or have health concerns, starting earlier makes more sense even with lower monthly amounts.
About Brent
Brent Matthew is the founder and CEO of Scottsdale Wealth Advisory, a full-service fiduciary retirement planning firm serving pre-retirees and retirees across Arizona and multiple states. With a strong commitment to always putting clients first, Brent leads the firm in developing comprehensive, tax-efficient financial plans tailored to each family’s unique goals. He is responsible for researching investment, annuity, and life insurance strategies and building smart asset allocations that reflect both long-term growth and risk management.
Brent is driven by a core belief: “The success of this firm will be measured by the success of the families it represents.” That client-first approach has guided his work since the beginning. He is currently enrolled at the College for Financial Planning and is on track to earn his CERTIFIED FINANCIAL PLANNER® designation. He also holds his Series 65 license and Arizona Life and Health Insurance Producers License.
Outside the office, Brent embraces the Arizona outdoors with “lil B” and their two pomskies, Heimo and Kota. Whether he’s hiking, fishing, dirt biking, skiing, golfing, kayaking, or skeet shooting, Brent finds balance and joy in staying active. He’s also a fan of CrossFit, brunching, and cruising the Phoenix canal system on his beach cruiser—usually with classic tunes from the Marshall Tucker Band, Gordon Lightfoot, or Crosby, Stills & Nash playing in the background. To learn more about Brent, connect with him on LinkedIn.
Advisory services are offered by Scottsdale Wealth Advisory, LLC, an Investment Advisor in the State of Arizona. Insurance products and services are offered through Scottsdale Wealth Advisory, LLC. Scottsdale Wealth Advisory, LLC is not affiliated with or endorsed by the Social Security Administration or any government agency, and is not engaged in the practice of law. Be sure to consult with a licensed financial professional to confirm the accuracy of the insurance product you are considering.
