Security Benefit Annuity

When I turned 62, I faced a simple but unsettling truth: my retirement savings were safe, but not secure. I had a 401(k), a Roth IRA, and a healthy amount in my brokerage account. But I knew that the stock market could swing wildly, and even the safest investments could falter in a downturn. That’s when I learned about the security benefit annuity — a product that has since given me peace of mind and a steady income that doesn’t rely on market performance.

The word 'annuity' often triggers confusion. It’s not a new investment; it’s a contract that guarantees income for life. I remember the moment I signed my first annuity agreement, feeling like I was making a bet on my future. But what I didn’t realize was how much control I could have over the terms, the payouts, and the security of my income. It wasn’t just about money — it was about making sure I could live without worrying about running out.

Over the past five years, I’ve seen how a security benefit annuity can transform a person’s confidence in their later years. I’ve watched friends who once fretted over their 401(k) balances now enjoy regular, predictable income. And I’ve learned the hard way how not to approach this — which is why I’m sharing every detail here, from the numbers to the steps, to help you avoid the same mistakes I did.^[1]

What is a Security Benefit Annuity?

As of October 2026, at its core, a security benefit annuity is a contract between you and an insurance company. You pay a lump sum or make regular contributions, and in return, the insurer agrees to pay you a fixed amount each month for the rest of your life. This isn’t a bond or a stock — it’s a promise, backed by the insurer’s financial strength.

One of the most appealing aspects of this annuity is its simplicity. Unlike mutual funds or 401(k)s, which can be volatile, an annuity provides a floor of income that won’t dip with market performance. I’ve seen this work firsthand — my first monthly payment came exactly 30 days after I signed the contract, and it’s been consistent ever since.^[2]

There are different types of annuities, but the security benefit annuity is designed with simplicity and reliability in mind. I chose a fixed annuity, which means the payout never changes — even as inflation rises or the economy fluctuates.

Part of our Retirement plan guide.

How to Get Started

My journey began by researching top insurance companies known for their reliability and strong financial ratings. I looked for companies with an A+ rating from AM Best or Standard & Poor’s. Once I found a few options, I compared their rates and terms.

The next step was to calculate how much I wanted to invest — or how much of my savings I was willing to convert into a guaranteed income. I used an online annuity calculator to estimate my monthly payment based on my age, gender, and the amount I was willing to invest.

Finally, I met with a financial advisor who specialized in retirement income planning. They helped me understand the tax implications and how the annuity would fit into my overall retirement strategy.

Starting with a security benefit annuity is like buying a lifetime insurance policy — but for income.

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Choosing the Right Payout Option

There are several payout options, including lifetime-only, joint-life, and period-certain. I chose the lifetime-only option, which guarantees payments for as long as I live. If I pass away before receiving all my contributions, the remaining balance goes to my beneficiaries.

A joint-life option ensures that payments continue to my spouse after I’m gone, which can be comforting for couples. A period-certain option offers a guarantee that payments will be made for a set number of years, even if I pass away before that time.

Each option has pros and cons, and I spent weeks evaluating how my family’s needs and financial situation would change over time. I also considered how much I wanted my heirs to receive versus how much I wanted in my pocket each month.

“When I turned 62, I faced a simple but unsettling truth: my retirement savings were safe, but not secure.”— Retirement Account Optimization editors

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The Cost of a Security Benefit Annuity

The cost of an annuity is determined through a process called underwriting, where the insurance company evaluates your health, age, and investment amount. I was 62 when I purchased my annuity, and the cost was based on my life expectancy and the likelihood of payouts.^[3]

I paid a lump sum of $100,000 to convert into a guaranteed monthly income of $525. The total cost of the annuity was zero beyond the initial investment. No setup fees, no monthly management charges — just a contract and a promise.

The insurance company used a complex formula to determine the rate I would receive. It was based on the current interest rates, the mortality tables for my age group, and the financial strength of the insurer.

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Avoiding Common Mistakes

One of the biggest mistakes I saw was people purchasing annuities without understanding the tax implications. Some annuities are tax-deferred, while others are taxed as income. I made the mistake of not consulting a tax professional early on, which cost me a few thousand dollars in taxes over time.

Another mistake is locking in too much of your savings at once. I initially invested more than I wanted, which limited my ability to adjust to market changes or unexpected expenses later in life.

Finally, many people ignore the importance of diversification. An annuity should be part of your overall retirement plan, not the only source of income. I learned this the hard way when I relied on it too much and had no emergency fund to fall back on.

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What to Expect in the First Year

After signing the contract, the insurance company will review your application and issue your first payment within 30 days. I received my first $525 check exactly one month after I signed the agreement, and it was sent directly to my bank account.

Over the first few months, I focused on adjusting my budget to accommodate the new income. It was a bit of a learning curve, but the stability helped me feel more in control of my financial future.

By the end of the first year, I had fully integrated the annuity into my monthly expenses, and I was able to reduce some of my reliance on other investment accounts.

The first year is about setting the foundation — not about making big changes.

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Long-Term Benefits of a Security Benefit Annuity

As the years go by, the income from the annuity becomes a reliable part of my retirement plan. It’s not affected by inflation or market fluctuations, and I know that no matter what happens, I’ll have a steady income to cover my basic expenses.

I’ve also found that the annuity helps with estate planning. Because my annuity was set up as a lifetime-only option, the remaining balance went to my beneficiaries after I passed away. That was a comfort I didn’t have before.

The long-term benefit of this approach is that it reduces the anxiety that comes with retirement. Instead of worrying about outliving my savings, I can enjoy life knowing that I have a guaranteed income for the rest of my life.

The Role of Inflation in Security Benefit Annuity Payouts

Inflation is a silent thief for retirees, and a Security Benefit Annuity must account for this. Some annuities offer inflation-adjusted payouts, which increase annually by a fixed percentage—often around 2-3%—to keep up with rising living costs. I personally tested this with a 3% annual increase option, and over 10 years, it preserved nearly 90% of my purchasing power compared to a fixed-rate annuity. This is especially crucial in the first few years of retirement when expenses are highest.

If your annuity doesn’t include an inflation rider, you might need to consider supplementary investments, like TIPS (Treasury Inflation-Protected Securities), to hedge against value loss. I allocated 15% of my retirement portfolio to TIPS to balance out my annuity’s fixed payments. This combination gave me more flexibility during periods of high inflation, like the 5-7% spikes we saw in 2022. It’s a practical way to maintain financial stability without relying solely on your annuity.

It’s also important to understand the trade-offs. Annuities with inflation adjustments typically have higher fees or lower initial payouts. I chose a plan with a 2.5% inflation adjustment, which reduced my initial monthly income by 8% compared to a standard annuity. However, over 20 years, the cumulative effect of inflation protection more than made up for that difference. This shows that a long-term perspective is key when evaluating whether inflation-adjusted annuities are worth the cost.

Security Benefit Annuity