Single Life Annuity: Income to Be Able to Retire Without Fear

Single life annuity—or “One-Life Annuity,” as it is called in TIAA-CREF’s documentation—guarantees that you will have income for the rest of your life. Given the size of the monthly payment, it benefits those who have not had an opportunity to accumulate large retirement accounts and run the risk of outliving their assets. The one-life alternative seems obviously appropriate for single people who either do not wish or are not in a position to pass retirement assets on to heirs or charity. They also do not have another person for whom they want to provide an income after their death. In these cases, the value of an annuity comes to the fore. It guarantees that the payment stream that you have chosen will continue for the rest of your life. You will not, as noted above, outlive your assets. Combined with Social Security payments, a single life annuity, for those situated as above described, can provide the necessary income to be able to retire without fear.

If, however, you have a larger accumulation, say $750,000 or more, and you have other income-producing assets, you may find that an annuity is not the most advantageous choice. If you would like to be able to access funds as you need them (in addition to the minimum distribution, which must be taken out as a matter of law) and you would like to name heirs or a charity as your beneficiary, a single life annuity may not provide the right answer. You must face the trade-off between flexibility and security.

Some participants want their retirement account to be invested and distributed over the lifetimes of the participant, spouse, and children. In those cases, the Minimum Distribution Option TIA-CREF represents the only viable option. Even those who are not as single-minded ought to examine the MDO as an alternative to or as a companion to annuitization. You do not have to annuitize your entire accumulation, and you do not have to take that step on your Required Beginning Date. Remember, as you look at the numbers, that annuitization represents an irrevocable step, and you ought to be clear in your mind that the annuity you pick best suits your needs. Annuitizing in stages may work best for you if you choose single life annuity. Assuming that your accumulation does not contract violently, the only cost of delay may result from a reduction in the permissible guaranteed period or term certain.