Educational PurposeThis worksheet helps individuals and couples compare retirement-income options side by side. An annuity is a contract with an insurance company that may provide periodic payments beginning immediately or in the future. The specific guarantees, withdrawal rights, charges, and income options depend on the written contract.
1. Identify the Income Need
Person or household completing the worksheet
Date completed
Desired retirement date
Essential monthly retirement expenses
Existing dependable monthly income (Social Security, pensions, other reliable income)
Estimated essential-income gap (essential expenses − dependable income)
Amount of additional predictable income being considered (per month)
2. Clarify the Main Objective
Why is additional guaranteed income being considered?
- Cover essential monthly expenses
- Reduce the risk of outliving savings
- Replace part of employment income
- Provide income for a surviving spouse
- Reduce dependence on investment withdrawals
- Create income beginning later in retirement
- Increase predictability
- Other
Our primary objective
The expense or need this income should cover
3. List Current Retirement-Income Sources
| Income source | Option A | Option B | Option C |
|---|---|---|---|
| Social Security — Adult 1 | __________ | __________ | __________ |
| Social Security — Adult 2 | __________ | __________ | __________ |
| Pension | __________ | __________ | __________ |
| Existing annuity | __________ | __________ | __________ |
| Rental or business income | __________ | __________ | __________ |
| Other | __________ | __________ | __________ |
| Total | __________ | __________ | __________ |
Remaining monthly income need
4. Identify the Options Being Compared
Option A
Provider or insurer
Product or income option
Type
- Immediate annuity
- Deferred annuity
- Annuitization option
- Lifetime-withdrawal rider
- Pension option
- Other
Option B
Provider or insurer
Product or income option
Type
- Immediate annuity
- Deferred annuity
- Annuitization option
- Lifetime-withdrawal rider
- Pension option
- Other
Option C
Provider or insurer
Product or income option
Type
- Immediate annuity
- Deferred annuity
- Annuitization option
- Lifetime-withdrawal rider
- Pension option
- Other
5. Income Comparison
| Feature | Option A | Option B | Option C |
|---|---|---|---|
| Amount contributed or applied | __________ | __________ | __________ |
| Income-start date | __________ | __________ | __________ |
| Initial monthly income | __________ | __________ | __________ |
| Initial annual income | __________ | __________ | __________ |
| Covers one or two lives? | __________ | __________ | __________ |
| Lifetime or fixed period? | __________ | __________ | __________ |
| Guaranteed period included? | __________ | __________ | __________ |
| Payment frequency | __________ | __________ | __________ |
| Can income decrease? | __________ | __________ | __________ |
| Can income increase? | __________ | __________ | __________ |
| Is the election reversible? | __________ | __________ | __________ |
Which option provides the highest starting income?
Does the highest payment require giving up another benefit? (Yes / No / Unsure)
Benefit or access being reduced
6. Understand the Guarantee
The word guaranteed may refer to income, principal, an interest rate, a withdrawal benefit, or another contract value. Identify exactly what each option promises.
| Guarantee question | Option A | Option B | Option C |
|---|---|---|---|
| What is guaranteed? | __________ | __________ | __________ |
| How long does it last? | __________ | __________ | __________ |
| Who supports the guarantee? | __________ | __________ | __________ |
| What conditions must be followed? | __________ | __________ | __________ |
| Can withdrawals reduce it? | __________ | __________ | __________ |
| Can fees reduce it? | __________ | __________ | __________ |
| Can it be lost after an excess withdrawal? | __________ | __________ | __________ |
Annuity guarantees depend on the issuing insurance company’s financial strength and claims-paying ability. They are not the same as a bank-deposit or federal-government guarantee.
Guarantee we understand most clearly
Guarantee requiring further explanation
7. Cash Value and Income Base
Some annuities use a separate income base or benefit base to calculate withdrawals. That figure may not equal the amount available as cash.
| Value | Option A | Option B | Option C |
|---|---|---|---|
| Current or initial contract value | __________ | __________ | __________ |
| Income or benefit base | __________ | __________ | __________ |
| Current surrender value | __________ | __________ | __________ |
| Amount available without insurer surrender charge | __________ | __________ | __________ |
Can the income base be withdrawn as one lump sum? (Options A / B / C)
What happens to income after an excess withdrawal? (Options A / B / C)
8. Liquidity and Access
Many annuities allow some access to money, but withdrawals during a surrender period may result in charges or reductions in benefits.
| Liquidity feature | Option A | Option B | Option C |
|---|---|---|---|
| Surrender period (years) | __________ | __________ | __________ |
| First-year surrender charge (%) | __________ | __________ | __________ |
| Annual charge-free withdrawal (%) | __________ | __________ | __________ |
| Market-value adjustment? | __________ | __________ | __________ |
| Full surrender allowed? | __________ | __________ | __________ |
| Effect on future income | __________ | __________ | __________ |
| Emergency waiver available? | __________ | __________ | __________ |
| Money remaining outside the proposed option | Option A | Option B | Option C |
|---|---|---|---|
| Liquid savings remaining | __________ | __________ | __________ |
| Emergency fund remaining | __________ | __________ | __________ |
Which option preserves the greatest flexibility?
9. Fees and Economic Trade-Offs
| Cost or limitation | Option A | Option B | Option C |
|---|---|---|---|
| Annual contract fee | __________ | __________ | __________ |
| Income-rider fee | __________ | __________ | __________ |
| Administrative fee | __________ | __________ | __________ |
| Investment expenses | __________ | __________ | __________ |
| Advisory fee | __________ | __________ | __________ |
| Surrender charges | __________ | __________ | __________ |
| Cap or participation limit | __________ | __________ | __________ |
| Spread or margin | __________ | __________ | __________ |
| Other cost | __________ | __________ | __________ |
| Estimated total annual explicit cost | __________ | __________ | __________ |
Which option appears least expensive?
Does the least expensive option provide the benefits we need? (Yes / No / Unsure)
10. Inflation and Income Growth
A level payment may remain contractually unchanged while its purchasing power declines as living costs rise.
| Inflation feature | Option A | Option B | Option C |
|---|---|---|---|
| Payment remains level | __________ | __________ | __________ |
| Contractual increase available | __________ | __________ | __________ |
| Increase guaranteed | __________ | __________ | __________ |
| Increase linked to an index | __________ | __________ | __________ |
| Starting income reduced for this feature | __________ | __________ | __________ |
| Maximum annual increase (%) | __________ | __________ | __________ |
Which option offers the strongest potential response to inflation?
Assets remaining outside the income option for potential growth
11. Survivor and Beneficiary Comparison
| Survivor or death provision | Option A | Option B | Option C |
|---|---|---|---|
| Income covers one or two lives | __________ | __________ | __________ |
| Income after first death | __________ | __________ | __________ |
| Percentage continuing to survivor (%) | __________ | __________ | __________ |
| Guaranteed payment period | __________ | __________ | __________ |
| Death benefit available | __________ | __________ | __________ |
| Return-of-premium feature | __________ | __________ | __________ |
| Remaining value accessible to beneficiaries | __________ | __________ | __________ |
| Additional cost or lower income required | __________ | __________ | __________ |
Which option best protects a surviving spouse or partner?
Which option provides the strongest beneficiary value?
Is beneficiary protection more important than maximum current income? (Yes / No / Balance)
12. Tax Considerations
Funding source
- Pretax retirement money
- After-tax money
- Combination or uncertain
Questions for a qualified tax professional
- How will payments be taxed?
- Will each payment be fully or partly taxable?
- Could an early-distribution penalty apply?
- Will required minimum distribution rules apply?
- Could a transfer or exchange create tax consequences?
- How will beneficiaries be taxed?
- Could state income taxes apply?
Tax issue requiring clarification
13. Insurance Company Review
| Insurer information | Option A | Option B | Option C |
|---|---|---|---|
| Full legal name | __________ | __________ | __________ |
| Financial-strength ratings reviewed | __________ | __________ | __________ |
| Ratings from more than one agency | __________ | __________ | __________ |
| State license confirmed | __________ | __________ | __________ |
| Recent rating change identified | __________ | __________ | __________ |
| Contract guarantee reviewed | __________ | __________ | __________ |
Financial-strength ratings are opinions and may change. They do not eliminate the risk that an insurer may experience financial difficulty.
Insurer question requiring further review
14. Compare the Trade-Offs
Rate each option from 1 to 5, with 5 representing the strongest fit for that need.
| Priority | Option A | Option B | Option C |
|---|---|---|---|
| Predictable income | __________ | __________ | __________ |
| Lifetime-income protection | __________ | __________ | __________ |
| Survivor protection | __________ | __________ | __________ |
| Access to money | __________ | __________ | __________ |
| Inflation response | __________ | __________ | __________ |
| Beneficiary value | __________ | __________ | __________ |
| Simplicity | __________ | __________ | __________ |
| Cost | __________ | __________ | __________ |
| Insurer strength | __________ | __________ | __________ |
| Overall fit | __________ | __________ | __________ |
| Total score | __________ | __________ | __________ |
The highest score does not automatically identify the best option. Some priorities may matter more than others.
Our three most important priorities
15. Advantages and Limitations
Option A
Primary advantage
Primary limitation
Question still unanswered
Option B
Primary advantage
Primary limitation
Question still unanswered
Option C
Primary advantage
Primary limitation
Question still unanswered
16. Decision Summary
Option that currently appears to fit best
Why
Benefit we value most
Trade-off we are least comfortable accepting
Information still needed before deciding
Alternatives we should also compare
Qualified professionals we may need to consult
- Licensed insurance professional
- Financial professional
- Tax professional
- Estate-planning attorney
- Retirement-plan administrator
- Other
Guaranteed Income Comparison Checklist
Before making a decision, confirm that you have compared:
- Starting income amount
- Income-start date
- One-life and joint-life options
- Length of the income promise
- Guaranteed and non-guaranteed features
- Contract value and income base
- Access to principal
- Surrender charges
- Annual fees and rider costs
- Inflation provisions
- Survivor income
- Death benefits
- Tax treatment
- Insurer financial strength
- Liquid funds remaining outside the contract
- Alternatives to the proposed option
- What would be lost when replacing an existing contract
- Whether the decision may be reversed
The TrueWealth Takeaway™
The option offering the highest initial payment is not automatically the strongest retirement-income choice. A thoughtful comparison considers how long the income lasts, who is covered, what remains accessible, how inflation may affect purchasing power, what a survivor or beneficiary may receive, and which costs and restrictions accompany the guarantee.
— The TrueWealth Perspective™
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Educational Disclaimer: This material is provided for educational purposes only and should not be interpreted as financial, insurance, legal, tax, or investment advice. Individual circumstances vary. Consult qualified professionals before making financial or insurance decisions.