For couples planning their financial future, the risk of outliving retirement savings is all too real. With Australians living longer and the cost of living rising in 2025, many are rethinking how to guarantee lifetime income. Enter the joint and survivor annuity—an often-overlooked solution that can provide steady income for both partners, no matter who lives longer. Let’s break down how these annuities work, their place in Australia’s retirement system, and what’s changed in 2025.
What is a Joint and Survivor Annuity?
A joint and survivor annuity is an insurance product designed to pay out a regular income for the lifetime of two people, typically spouses or long-term partners. Unlike a standard annuity, which stops payments when the annuitant dies, a joint and survivor annuity continues paying out—often at a reduced rate—to the surviving partner.
- Primary benefit: Protects both partners from the risk of outliving their savings.
- Payment options: Payments can be structured so the surviving partner receives 100%, 66%, or 50% of the initial income.
- Australian context: These annuities can be funded from superannuation or non-super assets.
Why Joint and Survivor Annuities Matter in 2025
Recent data from the Australian Bureau of Statistics shows that the average life expectancy continues to rise, with women expected to live well into their late 80s and men not far behind. This demographic shift has led to several policy changes:
- 2025 superannuation updates: New rules allow retirees to use more of their super to purchase lifetime income products, including joint and survivor annuities, without breaching transfer balance caps.
- Centrelink assessment: Changes to how lifetime annuities are assessed for the Age Pension assets and income tests mean more retirees could benefit from improved entitlements.
- Regulatory focus: ASIC and APRA continue to encourage providers to offer more transparent, flexible annuity products tailored for couples.
For couples, these updates mean joint and survivor annuities are more accessible—and potentially more tax-efficient—than ever before.
Pros, Cons, and Real-World Scenarios
Advantages
- Guaranteed lifetime income: Both partners receive income, regardless of who dies first.
- Protection from market downturns: Income is not affected by share market volatility or interest rate swings.
- Estate planning benefits: Reduces the risk that the surviving partner is left with insufficient funds.
Drawbacks
- Lower initial payments: Because payments may last longer, initial income is often lower than a single-life annuity.
- Irrevocable decision: Once purchased, annuity terms are generally fixed.
- Limited access to capital: Most annuities do not allow you to withdraw the lump sum once started.
Example: The Smiths’ Retirement Plan
Consider John and Margaret Smith, both aged 67. They decide to use $300,000 from their superannuation to purchase a joint and 60% survivor annuity. They receive $16,000 per year for life; when John passes away, Margaret continues to receive $9,600 annually. With the 2025 policy changes, only a portion of their annuity is counted towards the Age Pension means test, boosting their eligibility for additional government support.
How to Choose the Right Annuity Structure
Choosing between 100%, 66%, or 50% survivor options depends on your household needs and risk tolerance. Key considerations include:
- Each partner’s life expectancy and health status
- Other sources of retirement income (e.g., account-based pensions, rental income)
- Desire for certainty versus flexibility
- Impact on Age Pension eligibility
Many providers now offer interactive calculators and scenario modeling to help you weigh these factors. Always compare product disclosure statements and check for any guarantees, indexation options, or death benefit clauses.
Conclusion
For Australian couples aiming for security and peace of mind, joint and survivor annuities are an increasingly attractive part of the retirement toolkit. With 2025 policy updates making them more accessible and beneficial, now is the perfect time to explore whether this strategy fits your financial plan.
