No matter how far away you are from bidding adieux to the 9-to-5, it’s a good idea—no, a great idea—to take the time to add up what your retirement income might look like when that glorious day arrives. People are often surprised to see that there’s a gap between the money they’ve saved and the money they’ll need. (For help determining if you’ll have an income gap, scroll to the bottom of this article).

A typical plan for withdrawing income in retirement likely includes sources such as Social Security, pensions (if you’re one of a lucky few), and savings such as investment earnings, 401(k)s, IRAs, and more. But consider this: Aside from your Social Security or pension payment, how many sources of income in your plan are guaranteed to last your lifetime? If the answer is none, then it may be time to rethink how you’re funding your retirement.

Once a mainstay of retirement income sources, today, only 4% of companies offer a pension.1 And even Social Security is in question with predictions that it could stop paying benefits in full by 2034.2 If that guaranteed income side of your plan is looking a little less certain than you thought, consider adding an annuity to the mix.

An annuity is an insurance product and, other than Social Security, pensions, or life insurance, is the only way to add an additional source of guaranteed retirement income to your plan.†  Combined with the purchase of an optional living benefit, available for an extra charge in addition to the ongoing fees and expenses of the variable annuity, the product allows you to invest in the market while protecting and growing your income during market upturns and downturns.

"Imagine your advisor telling you that your annuity income payment went up even though the market went down."

Imagine your advisor telling you that your annuity income payment went up even though the market went down. Good times, right? This can be especially reassuring to those who haven’t saved enough and need to try and grow their money in the market to make up for lost time—but who can’t afford to take risks with their income. In addition, the product locks in gains (as often as monthly), which can increase the amount of your payments. But, the best part is that your income payments are guaranteed for life—no matter what the market does and no matter how long you live. (Sigh of relief!)

Of course, all of these benefits come at a price. Annuities have charges, contract fees and early withdrawal penalties that need to be considered. However, the tax-deferral‡‡ feature of an annuity means that you don’t pay taxes until you take withdrawals. 

So, if I’ve done my job here, you’re probably wondering how much guaranteed income you’ll have on that day you toss out the alarm clock for good. Download and use this income gap calculator to help you determine if there’s a gap between the money you’ll have and the money you’ll need in retirement. If you don’t like what you see, it’s time to consult with an advisor to create a personalized plan that addresses the need for guaranteed lifetime income—so you can bridge your gap and live the life you want. 


1CNN Money, “Ultimate Guide to Retirement,” October 19, 2017.

2Paul N. Van de Water and Kathy Ruffing, Center on Budget and Policy Priorities, “Social Security Benefits Are Modest,” August 7, 2017.


*What is an annuity?

Annuities are long-term, tax-deferred investments designed for retirement. Variable annuities involve risks and may lose value. Earnings are taxable as ordinary income when distributed and may be subject to a 10% additional tax if withdrawn before age 59½. Optional benefits are available for an extra charge in addition to the ongoing fees and expenses of the variable annuity.

Annuities are not for everyone. And, it’s important to remember that these products are meant to be long-term investments designed for retirement, so there are restrictions in place to discourage you from withdrawing all of your money at once or taking withdrawals before age 591/2. However, most annuities do allow for exceptions based on specific circumstances such as a terminal illness or other emergencies.

 Guarantees are backed by the claims paying ability of the issuing insurance company. 

 Optional benefits are available for an extra charge in addition to the ongoing fees and expenses of the variable annuity.

‡‡ Tax deferral offers no additional value if used to fund a qualified plan, such as a 401(k) or IRA, and may not be available if owned by a “non-natural person” such as a corporation or certain types of trusts.

Before investing, investors should carefully consider the investment objectives, risks, charges and expenses of the variable annuity and its underlying investment options. The current contract prospectus and underlying fund prospectuses, which are contained in the same document, provide this and other important information. Please contact your representative or the Company to obtain the prospectuses. Please read the prospectuses carefully before investing or sending money.

The latest income date allowed is age 95, which is the required age to annuitize or to take a lump sum. Please see the prospectus for important information regarding the annuitization of a contract.

The opinions and forecasts expressed are those of the author and individuals quoted and should not be construed as a recommendation or as complete.

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