Enter a search term.
line drawing document and pencil

File a claim

Need to file an insurance claim? We’ll make the process as supportive, simple and swift as possible.

Action Teams

If you want to make an impact in your community but aren't sure where to begin, we're here to help.
Illustration of stairs and arrow pointing upward

Contact support

Can’t find what you’re looking for? Need to discuss a complex question? Let us know—we’re happy to help.
Use the search bar above to find information throughout our website. Or choose a topic you want to learn more about.

What is an immediate annuity & how does it work?

Mature Couple Cooking Together At Home
Sofie Delauw/Sofie Delauw / Stocksy United

The bottom line:

Click with dollar sign in the middle
Immediate annuities can provide you with a steady income stream in retirement.
Illustration of a stopwatch
Withdrawals begin immediate or within the first year after your purchase.
Illustration of person thinking of money
Match your tolerance for risk by choosing a fixed or variable annuity.

What is an immediate annuity?

An immediate annuity, also referred to as a single payment immediate annuity (SPIA), is an insurance contract funded by a lump sum payment, such as money from a savings account, a 401(k) or an individual retirement account (IRA). You decide on the frequency and duration of your payouts when you buy it. Your initial withdrawal can start in as early as 30 days but must be taken within the first year. A possible consideration for people with little or no pension income, an immediate annuity can provide you with a steady income stream during retirement.

Can an immediate annuity help fund your retirement?

An immediate annuity can help bridge the gap between retiring and claiming your Social Security benefits without liquidating your retirement savings accounts.

Without a pension plan from your employer to provide consistent income (which is becoming increasingly rare these days), your options may include taking out cash from your 401(k) or IRA to cover your expenses. But if you withdraw your money from these accounts too quickly, you risk outliving your savings. Withdraw it too conservatively and it may not be enough to cover your monthly expenses.

Guaranteed income from your immediate annuity can be used to help cover essential expenses like groceries, insurance, utilities and other monthly bills. The money you’ve saved in your other retirement accounts can be used on non-essential spending, like vacations and family travel.

What are the key benefits of an immediate annuity?

Immediate annuities are an option if you're close to retirement and need a steady income.

  • Payouts can begin immediately. Payments start one month after your annuity is issued or can be delayed up to a year.
  • Payments remain consistent. Consistent payouts mean you are less likely to outlive your retirement savings.
  • Potential for tax savings. Your annuity continues to defer taxes. Only the annuity payments you receive in that year are taxable.
  • Can be set up as a joint annuity. Payouts can continue as long as you and your spouse or partner live.
  • They're easy to manage. Once you purchase an immediate annuity, there are no additional steps and nothing to monitor.
  • Flexible payout options. Flexibility of payouts is one of the advantages an immediate annuity offers. You can decide between level payments, fixed percentage increases, or increases tied to the rate of inflation.

What are the disadvantages of immediate annuities?

While immediate annuities have several advantages, they’re not suitable for everyone. These types of annuities are typically not designed for people looking for increased wealth or capital appreciation. Plus, when you die, payments can stop, leaving nothing for your heirs.

  • Reduces cash liquidity. When you purchase an annuity, you lose immediate access to that money. If you need it soon, it won’t be available—at least without a sizable penalty.
  • No accumulation phase. Since you start receiving payments immediately, there is no accumulation phase and therefore less growth potential.
  • Leave a smaller inheritance. Unless you have selected a specific amount of time to receive payments, when you pass away the balance of your annuity will go to the insurance company's general account. It will not go to your heirs.
  • Higher upfront costs. Immediate annuities are purchased with a large, upfront deposit of cash.

What types of immediate annuities are available?

While there are many optional features in an immediate annuity, it will only grow income in two ways—through interest rates as a fixed annuity or by investing your money in the market as a variable annuity.

Fixed immediate annuity

In exchange for your lump-sum payment, the annuity provider agrees to pay you a consistent, set income for life or a specified term. The fixed interest rate removes any risk associated with market ups and downs. It allows you to receive a consistent income stream through retirement.

Read more: What is a fixed annuity?

Variable immediate annuity

Variable immediate annuities are held in subaccounts and are dependent on market risk and performance. You choose to invest in subaccounts tied to assets like stocks, bonds, and money market funds. If the investments do well, your payout increases.

But on the same note, if the investments perform poorly, your payments may decrease, like regular investment accounts. An immediate variable annuity may be a great addition to your retirement income plan if you've already maxed out your Roth IRA or 401(k). So you can focus on your goals, knowing you won't outlive your money. Thrivent does not currently offer variable immediate annuities.

Read more: What is a variable annuity?

Annuity payout options

After you pay the premium, a guaranteed stream of income (annuity payments) will begin based on the type of annuity payments you choose. The available options include the following:

  • Fixed period. Lasts for a set period, such as 15 or 25 years, instead of a lifetime. Also referred to as period-certain or term-certain payout options.
  • Life-only. Decline to pass leftover money onto a beneficiary when you die. Potentially receive higher monthly income payouts in exchange. (This is different from other types of payout options which allow you to pass on remaining funds.)
  • Single-life vs. joint-and-survivor. "Single-life" is another way of saying "life-only" payout option. (Defined above.) A joint-and-survivor payout allows you to pass on remaining funds to a beneficiary.
  • 50% joint-and-survivor. Are your annuity income payouts shared by two people? If so, this type of payout option will pay half after one person dies.

Read more: The 4 types of annuities: Which is right for you?

What’s the difference between immediate & deferred annuities?

The terms "deferred" and "immediate" refer to when the actual distribution of your annuity begins. A deferred annuity is funded with a lump sum or payments over time (called an accumulation period). Payout starts on a future date. An immediate annuity starts paying when you deposit a lump sum or in the first 12 months following its purchase.

Read more: What is a deferred annuity?

When should you consider an immediate annuity?

You may want to consider an immediate annuity if you fall into one of these scenarios:

  • You're entering retirement soon and need a secure way to generate income when retired. Payments begin right away, and it’s one way of turning savings into income for the rest of your life.
  • You're looking for a secure way to generate income in retirement.

To learn more about how immediate annuities can help you reach your retirement goals, connect with a financial advisor near you.

This web page provides general annuities information. It does not contain information specific to a Thrivent financial product. If you are looking for information specific to a Thrivent financial product or your existing annuity contract, please log in and refer to your contract or prospectus document—or visit our annuities product web page.
Annuities are intended to be long term, particularly for retirement. Product availability and features may vary by state.

Withdrawals and surrenders will decrease the value of your annuity and, subsequently, the income you receive. Any withdrawals in excess of 10% may be subject to a surrender charge. The taxable portion of each annuity distribution is subject to income taxation. If a taxpayer is younger than 59½ at the time of distribution, a 10% federal tax penalty will apply to the taxable portion of the distribution unless a penalty-tax exception applies.

Guarantees based on the financial strength and claims paying ability of Thrivent.

Holding an annuity inside a tax-qualified plan does not provide any additional tax benefits.

Refer to the Thrivent Investment Management Inc. Form CRS Relationship Summary for more information about us; our relationships and services; fees, costs, conflicts, and standard of conduct; disciplinary history; and additional information. Refer to the Thrivent Investment Management Inc. Regulation Best Interest Disclosure document for information on fees, products, services, potential conflicts of interest, and additional information. Both are available upon request from your financial advisor or professional and on

Investing in a variable annuity involves risk, including the possible loss of principal. The prospectus contains more complete information on the investment objectives, risks, charges and expenses of the variable annuity contract and underlying investment options, which investors should read and consider carefully before investing. Prospectuses are available from a Thrivent financial professional or at

Thrivent and its financial professionals do not provide legal, accounting or tax advice. Consult your attorney or tax professional.

Variable annuity contracts have exclusions, limitations, reductions of benefits and terms under which the contract may be continued in force or discontinued. For costs and complete details of coverage, contact your licensed insurance agent/producer.