Annuities

Deferred Income Annuities: The Retirement Income Strategy That Starts Paying Later

A deferred income annuity lets you pay a lump sum today in exchange for guaranteed income starting at a future date. Here is how it works and when it makes sense.

🇺🇸 Patriot Plans Editorial Team·7 min read·May 25, 2026

A deferred income annuity (DIA) — also called a longevity annuity — is one of the most efficient ways to guarantee income in late retirement. You pay a lump sum today and receive guaranteed income starting at a future date (typically age 75-85). Here is how it works.

How a DIA Works

You pay a lump sum premium to an insurance company. In exchange, the insurance company promises to pay you a guaranteed income starting at a future date you choose. The longer you defer, the higher the income payments. A $100,000 DIA purchased at age 65 with income starting at age 80 might pay $2,000-$3,000/month for life.

The Longevity Risk It Solves

The biggest financial risk in retirement is outliving your money. A DIA addresses this by providing guaranteed income in late retirement when other assets may be depleted. It is essentially insurance against living too long.

QLAC: The IRA Version

A Qualified Longevity Annuity Contract (QLAC) is a DIA purchased inside an IRA. You can use up to $200,000 (or 25% of your IRA balance) to purchase a QLAC. The QLAC amount is excluded from Required Minimum Distribution (RMD) calculations until income begins — a significant tax advantage.

The Trade-Off

The primary trade-off with a DIA is that you give up access to the premium. If you die before income starts, you (or your beneficiaries) may receive nothing (depending on the policy). Return of premium riders are available but reduce the income amount.

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Frequently Asked Questions

What happens to my DIA if I die before income starts?

It depends on the policy. Some DIAs have a return of premium death benefit. Others pay nothing if you die before income starts. A cash refund option returns the premium to beneficiaries. Ask about death benefit options when comparing DIAs.

Can I change my income start date after I buy a DIA?

Some DIAs allow you to change the income start date within a range. Others lock in the start date at purchase. Ask about flexibility when comparing policies.

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