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Income annuity choices through Vanguard

An income annuity can help reduce the risk you'll outlive your money.

What's an income annuity?

A type of annuity that allows you to make a onetime investment in exchange for predictable income payments that can continue for as long as you live. This process is called "annuitization."

What are the payment options?

When you purchase an income annuity contract, you decide when you want the payments to start and how long you want them to last.

You can start your payments:

  • As early as 30 days from the purchase date.
  • As late as your 85th birthday.

You can make your payments last for:

  • Your lifetime.
  • Your lifetime and another person's (the joint annuitant).
  • A specific number of years you choose.

Why should I consider an income annuity?

Here are some key reasons to consider an income annuity.

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Generate lifetime income

We insure things that are the most important to us: our homes, our cars, our health, and the health of our loved ones. You can do the same for your retirement with an income annuity, which can provide a steady income stream guaranteed for life or a specified number of years.

Protect against market risk

During a market decline, traditional investments can lose money and your savings may not have time to recover—especially if you're near retirement or already retired. But the stock and bond markets don't affect annuity income.

Gain peace of mind

With an income annuity, you may feel more confident knowing a portion of your income (in addition to Social Security or a traditional pension you might have) is guaranteed for life. It's like getting a paycheck throughout your retirement.

Ensure you'll have money for life

Outliving your life expectancy can be wonderful as long as you don't deplete your assets.

Safeguard against significant out-of-pocket expenses

Health care costs—or other unexpected expenses—could end up throwing your retirement income plans off course. An income annuity can help keep you on track.

Because buying an income annuity means trading a portion of your retirement savings for a guaranteed income stream, it's important to make sure you have money available for emergencies and contingencies. You should also understand there are other ways to create income streams without permanently giving up control of your investment.

Go in-depth ... Read our brochure to learn more about your options.

How much should I annuitize?

While everyone's situation is different, you may want to consider whether you have a gap between your basic living expenses and your guaranteed income (like Social Security and any pensions you have).

First, estimate your basic retirement living expenses such as food, shelter, clothing, and transportation. Don't forget to account for dining out, travel, and entertainment if they're important to you.

Next, compare these expenses against your guaranteed income sources. If there's a gap, an income annuity might help you make up the difference.

How to fill an income gap in retirement

Your gateway to an annuity that fits your goals

Through Income Solutions®, you'll have low-cost access to multiple well-known, high-quality insurance companies that issue income annuities. You can research and request annuity quotes from all of these insurance companies and receive responses in seconds.

The Income Solutions platform is designed specifically for investors who want to convert a portion of retirement savings into a reliable income stream to supplement other income. Receiving this income could lead to more confidence heading into retirement and more security while you're enjoying it.*

Note: You need to be a Vanguard client to log on to the platform. Otherwise, call our annuity specialists to get quotes.

Learn more about Hueler Investment Services

Why buy an income annuity through Vanguard?

You get easy access to "apples to apples" annuity comparisons in which you'll find:

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Low cost

Invest less up-front and still get the guaranteed income you want with a high-quality annuity.

Locked-in interest rate period

Lock in your interest rate quote for 7 days. If you decide to buy the income annuity, you have 30 days from the date you received the quote to fund your contract.

Annual payment increase

Choose annuity payments that increase by a set amount annually (1% to 5%).

Onetime flat fee

There is a onetime fee equal to 2% of the purchase amount. All income annuity quotes include this transaction fee.

Flexible options to help fine-tune your needs

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Funding sources

Use qualified (pre-tax) or nonqualified (after-tax) money to buy your annuity.

Initial investment amount

Decide on an initial investment amount of at least $10,000.

Starting age

Determine when you want your payments to begin—your "commencement age." Need money right away? Start payments as soon as 30 days after the purchase. Preparing for the future? Defer your payments for up to 40 years or until your 85th birthday—whichever comes first.

Survivor percentages

For joint contracts, you can have annuity payments continue for your survivor after your death. You can choose whether payments continue at the original amount (100%) or at 50%, 66.67%, or 75% of the original payment.

Death benefit

A deferred income annuity has a death benefit option that returns your initial purchase amount to your beneficiaries if you die before the commencement age you've chosen.

How annuities work at Vanguard

If you're ready to see what income payments you might be eligible for based on how much you have to invest and what options you want, use the Income Solutions tool.

Or call us for a free annuity "checkup" from an unbiased Vanguard annuity specialist who doesn't work for commissions.

Call 800-600-4816.

Managing your annuity

After you've purchased an income annuity through Hueler's Income Solutions website, you'll manage your annuity with the insurer you selected.

Get started

Our licensed annuity specialists are here to help.

Call 800-600-4816

Monday through Friday
8 a.m. to 8 p.m., Eastern time


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REFERENCE CONTENT

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Annuitant

Generally, the person who receives income payments from the annuity. The annuitant's age is used to calculate the maximum annual withdrawal amount.

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Stock

Usually refers to common stock, which is an investment that represents part ownership in a corporation. Each share of stock is a proportional stake in the corporation's assets and profits.

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Bond

A loan to a corporation, government, or government agency in exchange for regular interest payments. The bond issuer agrees to pay back the loan by a specific date. Bonds can be traded on the secondary market.

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Assets

The money you have invested in the major asset classes—stocks, bonds, and short-term or "cash" investments.

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How to fill an income gap in retirement

This chart shows a hypothetical situation of a husband and wife who are examining their need for additional guaranteed income in retirement, based on their estimates of monthly basic living expenses and known sources of monthly retirement income.

In this example, they expect their monthly basic living expenses to be $5,500. The husband's monthly Social Security income will be about $2,250 and the wife's Social Security income will be about $1,750. The couple's retirement income gap is estimated to be $1,500. Buying an income annuity to generate that amount each month can help them bridge the gap.

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Interest rate

Income you can receive from your annuity. The annuity's interest rate is in effect for a specific period of time.

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Market

The trading of a universe of investments, based on factors like supply and demand. For example, the "stock market" refers to the trading of stocks.

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Pre-tax contribution

Investments in a retirement plan made with funds from an employee's paycheck before federal income taxes are deducted.

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After-tax contribution

Investments in a retirement plan that come from the taxable portion of an employee's pay.

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Beneficiary

A person or organization designated to receive the proceeds of an annuity contract after the owner dies.

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Hueler Investment Services

Income Solutions® was launched in 2004 to serve retiring workers interested in converting retirement savings into lifetime income through the use of an annuity. Vanguard teamed up with Hueler Investment Services, Inc. (Hueler), in 2010 to make the Income Solutions platform available to clients like you.

Hueler operates the Income Solutions platform, which capitalizes on the firm's market and technology expertise as well as its established relationships with insurance companies. Hueler has been specializing in serving insurance companies, retirement plan sponsors, institutional investment managers, and banks since it started in 1987.

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Commission

A fee charged by a broker for buying and selling securities.