The Flexibility of Annuities: Can You Split Annuity Income?

handsome man standing blackboard with drawn dollar concept

In the world of retirement planning, annuities stand out as a popular choice for their ability to provide a steady income stream, offering a semblance of a paycheck even after you’ve stepped away from your regular employment. However, as life circumstances change, so too may your financial needs and goals. It’s no wonder then that retirees often ask, “Can you split annuity income?”

The short answer is yes, but the specifics depend on the type of annuity you own and the terms set by the annuity contract. This article dives deep into the nuances of splitting annuity income, aiming to provide retirees with a clearer understanding of their options.

Types of Annuities and Flexibility

Annuities come in various forms, each with its features, benefits, and restrictions:

Immediate vs. Deferred Annuities

  • Immediate Annuities: Upon investment, they start paying out income either immediately or within a year. These are less likely to offer the flexibility of splitting income due to their nature of providing immediate, fixed returns based on the initial lump sum payment.
  • Deferred Annuities: These allow your money to grow tax-deferred for a period before income payments begin. Some deferred annuities might offer more flexibility in how and when you can start receiving income payments.

Fixed vs. Variable Annuities

  • Fixed Annuities: Offer a guaranteed payout, which means splitting the income might be more straightforward but restricted to the terms agreed upon at the purchase.
  • Variable Annuities: Allow the owner to invest in various funds, which means the income can fluctuate. Depending on the contract, you might be able to adjust the income streams based on the performance of chosen investments or personal needs.

Splitting Annuity Income

Joint Annuities

For couples, joint annuities can be a way to split annuity income effectively. Upon the death of one partner, the surviving partner continues to receive payments, ensuring a continuous income stream. This method inherently divides the income between two people.

Partial Annuitization

Some annuity contracts allow for partial annuitization, which means you can convert a portion of your annuity’s value into a stream of periodic payments. The remainder of the annuity’s value continues to accumulate interest, giving you flexibility in managing income and growth.


Depending on your annuity’s terms, you might be allowed to take partial withdrawals instead of setting up regular payments. This can effectively split your annuity income over time, though it’s essential to understand the potential tax implications and fees, as well as any impact this might have on your future income stream.

Considerations for Splitting Annuity Income

  • Tax Implications: Annuity payments are subject to tax based on the earnings they represent. Understanding how splitting your annuity income affects your tax situation is crucial.
  • Contract Terms: Always review your annuity contract carefully or consult with a financial advisor to understand the specific terms and conditions related to splitting your annuity income.
  • Financial Goals: Consider your long-term financial needs and whether modifying your annuity income aligns with your goals. For some, a steady and predictable income stream is vital, while others might prefer more flexibility.
  • Life Changes: Life circumstances can change drastically. Having the option to adjust your annuity income can provide peace of mind and financial security during unexpected events.


Retirees seeking to adjust their annuity income will find that options exist, albeit within certain limitations and guidelines defined by their annuity’s type and terms. Whether it’s through structured withdrawals, partial annuitization, or choosing a joint annuity, flexibility can be found with careful planning and a clear understanding of the contract’s fine print. Always consider seeking advice from a qualified financial advisor to make informed decisions about splitting your annuity income to best meet your retirement needs.

Leave A Comment

Our team of experienced advisors is here to provide you with clear and unbiased information about different types of annuities, their benefits, and potential drawbacks.

5054 Dorsey Hall Dr. Suite 205 Ellicott City MD 21401
(Sat - Thursday)
(10am - 05 pm)

Subscribe to our newsletter

Sign up to receive latest news, updates, promotions, and special offers delivered directly to your inbox.
No, thanks