Income for life

By Sara Sanford - February 26, 2021

American retirement realities continue to evolve, and traditional forms of retirement income no longer provide the same sense of security it once did. Knowing how to balance between protecting what you've already earned and trying to grow your assets is crucial to achieving your diverse goals.


The retirement realities faced by Americans continue to change. Lifespans are longer, a 30-year retirement isn’t unusual, and traditional sources of retirement income – mainly Social Security and pensions – don’t provide the same sense of security that they did in the past. Beyond your own costs in retirement, you may have a variety of other priorities to consider: How are you going to afford college for your children? What happens to your portfolio if there’s a market downturn? What will you be able to leave behind for your loved ones?

At the heart of meeting these diverse goals is a crucial balance between protecting what you’ve already earned while still taking risks to grow.

Finding Balance with Lifetime Income

An annuity* can provide the sense of protection you need to find this balance by giving you the security of income for life. Lifetime income provides a protected financial foundation that allows you to leverage other income for growth, and in turn, even more protected income.

Annuities can often be perceived as suitable for a particular kind of investor – one who’s willing to trade potential for gains for a lack of risk. In reality, annuities offer the potential to address a diverse set of investing needs.

To understand the role an annuity can play in your financial plan, it’s helpful to be acquainted with the high-level benefits:

Benefits of an Annuity: Balancing Protection and Growth

Annuities can add stability by diversifying your investments and providing steady, reliable income. Annuities are considered insurance products, and while some are also considered securities due to their investment options, they can help provide income for the rest of your life. However, there is no guarantee that a variable annuity with an add-on living benefit will provide sufficient supplemental retirement income.

For those looking for additional confidence during retirement, annuities can protect the savings you’ve worked hard for, while also providing flexibility and growth potential:

  • Most annuities are tax-sheltered investments. This means that when your annuities earn money, the taxes on those earnings are deferred until you make withdrawals. Deferring these taxes allows you to keep more of your money working for you in the market, with the potential to accumulate and compound over time.
  • Some annuities offer the option for a guaranteed death benefit that would pass on to your beneficiaries, as long as you don’t annuitize your contract. There are also options for annuities that offer a unique feature called a “step-up.” This feature can be added on to lock in investment gains, so that your beneficiaries would receive the stepped-up amount, even in the case of market volatility in the interim. This means that your legacy has the opportunity to continue growing.
  • Unlike other tax-deferred retirement accounts, such as IRAs or 401(k)s, there is no annual contribution limit for an annuity. This means you can continue to put money away in them, and that they can be particularly useful for those who may be nearing retirement age and are still playing catch-up.
Annuities: Diverse Options for Diverse Needs

When determining what kind of annuity is right for you, you should take into account your risk tolerance, your timeline of income needs, what other sources of income you have, and what assets already make up the rest of your portfolio. Here is a quick introduction to a range of annuities that can provide a home base of protection while also addressing a range of needs:

  • Fixed annuities are a great option for more conservative investors who want a predictable payment that won’t increase or decrease due to stock market performance.
  • A variable annuity can be a great fit if you’re willing to take on a little more risk, because the value of a variable annuity can vary depending on the performance of an underlying portfolio of mutual funds. While this offers the possibility of greater returns and higher income than a fixed annuity, a variable annuity also carries the risk that it could fall in value.
  • A fixed-index annuity can work for you if your goal is to build wealth and limit losses. A fixed-index annuity can also allow you to not only grow your money but also receive future income in payments similar to a pension. Because fixed-index annuities allow for conservative growth, they can lend the sense of security while still diversifying your portfolio.
I’m Nearing Retirement – Now What?

When investing in an annuity, you will choose how you want your eventual payouts to be calculated. Some payment options are part of base products, while others are add-on benefits. It is important to discuss with your financial professional what is included in your annuity and what is an add-on. Here are some of the most common options:

  • Income for a Guaranteed Period (also called Period Certain Annuity): A specific payment amount is guaranteed for a set period of time. If you die before the end of the period, your beneficiary will receive the remainder of the payments for the guaranteed period.
  • Lifetime Payments: You are guaranteed an income payout during your lifetime, and there is no survivor benefit. The payouts can be fixed or variable, and the amount is determined by how much you invest, as well as your life expectancy.
  • Income for Life with a Guaranteed Period Certain Benefit (also called Life with Period Certain): A combination of a Lifetime Payment Annuity and a Period Certain Annuity. You receive a guaranteed payout for life that includes a period-certain phase. If you die during the period-certain phase of the account, your beneficiary will continue to receive the payment for the remainder of the period. For example, life with a 10-year period certain is a common arrangement. If you die five years after you begin collecting, the payments continue to your survivor for five more years.
If You’re Interested in an Annuity

If you don’t currently have an annuity, but now you’re considering one, your financial professional can partner with you to determine the type of annuity that best fits your long-term financial goals and complements the rest of your portfolio to ensure you’re diversifying in alignment with your risk tolerance. Maybe you want to secure guaranteed lifetime income. Maybe leaving a legacy for your loved ones is important to you. Maybe you want a greater sense of protection in the face of a market downturn. We know that the more information you have, the better decisions you can make for yourself.

If you want to take some time to revisit your overall retirement strategy before considering an annuity, Jackson’s Retirement Expense and Income Calculator can help you project realistic expenses in your retirement, so that you’re prepared to take control of your future.

*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 and may be subject to conditions and limitations. Guarantees are backed by the claims paying ability of the issuing insurance company. 

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

About the author

Sara Sanford, Executive Director, Gender Equity Now (GEN)

Sara Sanford is the Executive Director of Gender Equity Now (GEN), and the architect behind the GEN Certification, the first gold standard for gender parity in U.S. businesses.


Annuities are issued by Jackson National Life Insurance Company (Home Office: Lansing, Michigan) and in New York, annuities are issued by Jackson National Life Insurance Company of New York (Home Office: Purchase, New York). Variable products are distributed by Jackson National Life Distributors LLC, member FINRA. May not be available in all states and state variations may apply. These products have limitations and restrictions. Contact the Company for more information.

Jackson® is the marketing name for Jackson National Life Insurance Company® and Jackson National Life Insurance Company of New York®. Jackson National Life Distributors LLC.

Phil Wright is affiliated with Jackson. All other authors are not affiliated with Jackson.