Here’s one way to get guaranteed income while delaying Social Security

You also can get one that allows for joint owner. Or if you name a beneficiary, the payments would shift to that person if you were to die before then end of the contract.

Additionally, it’s important to know the annuity’s income will be taxed. If you use money from a tax-deferred account — say, an IRA or 401(k) — to fund a SPIA, you’ll pay taxes on this income as you receive it over the length of the annuity contract.

If the funding source was from accounts that are not tax-advantaged, such as a brokerage or savings account, you will only pay taxes on the portion of SPIA income that wasn’t already taxed through what the insurance company calls an exclusion. (Keep in mind, though, that liquidating funds from a brokerage account can come with its own tax implications.)

Your money also won’t be earning much. For example, financial advisor Ronald Palastro recently had a client who wanted a guaranteed monthly income of $2,750 for five years so he could delay taking Social Security until age 70, at which point his benefits would reach their maximum.

To get the monthly income needed, the insurance company required $156,500 upfront. While the math gets a bit tricky, the rate of return cited by the insurance company is just over 2.1 percent.

“It’s not a great rate, but for the purposes of giving him guaranteed income, it made sense in this situation,” said Palastro, a CFP with Cobblestone Wealth Advisors in Brooklyn, New York.

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Some advisors say that instead of using an SPIA, a person looking for income that isn’t subject to the whims of the stock market could consider certificates of deposit.

While the interest earned also isn’t high — you can find one-year CDs offering up to about 2.8 percent currently — the option can provide you with more liquidity than a SPIA and a guaranteed rate of return. It also generates more interest than a regular savings account.

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