For many retirees, the fear of outliving their nest egg is very real. A Deferred Income Annuity (DIA)—also called a longevity annuity—can deliver a guaranteed lifetime income stream while protecting your principal from market declines.
What Is a Deferred Income Annuity?
A DIA lets you invest a lump sum today in exchange for regular payouts that begin at a future date, anywhere from 2 to 30 years out. You choose:
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Start date: When payments kick in
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Payout frequency: Monthly, quarterly, or annually
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Duration: Your lifetime, your spouse’s lifetime, a fixed term, or a combination
Key Benefits of a DIA
- Guaranteed Lifetime Income – Your payments continue for life (or your spouse’s life), ensuring you never exhaust this portion of your savings.
- Principal Protection – Unlike stocks or bonds, your DIA principal isn’t exposed to market volatility—your payments include a return of your deposit plus interest.
- Higher Yields than CDs or Treasuries – DIAs typically offer higher payout rates than certificates of deposit or Treasury products, because each installment returns part of your principal as well as earnings.
- Fee Simplicity – Deferred income annuities rarely carry ongoing management fees, avoiding the drag that annual fees impose on other investments.
- “Set & Forget” Structure – Once purchased, you don’t need to monitor markets, adjust allocations, or worry about interest-rate swings.
Funding Your DIA
You can fund a DIA with a variety of sources:
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Sale proceeds from equities, bonds, business interests, or real estate
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Lump-sum distributions from tax-qualified plans (401(k), IRA, Roth IRA, pension)
This flexibility lets you earmark assets you no longer wish to manage actively for guaranteed future income.
Customization Options
Modern DIAs offer riders that tailor income to your needs:
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Joint & Survivor Annuity: Continues payments for your spouse’s lifetime after you pass.
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Certain & Continuous Annuity: Guarantees payouts for a minimum period (e.g., 5+ years) to your beneficiary.
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Refund Annuity: If you die before receiving your full investment back, the balance goes to your heirs.
How a DIA Fits Your “Safe Money” Bucket
In retirement planning, it pays to segment assets into growth, liquidity, and safety buckets. DIAs strengthen the safety bucket by:
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Delivering consistent, predictable income
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Reducing sequence-of-returns risk in the decumulation phase
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Allowing you to spend more confidently on other portfolio segments
Next Steps
If securing a reliable lifetime income is a priority, discuss DIAs with a qualified annuity specialist. They can analyze your existing savings, Social Security benefits, and employer-sponsored plans to determine whether adding a Deferred Income Annuity enhances your overall retirement strategy.
