Income protection in retirement: is it possible?

December 1, 2023


Learn how an annuity may help provide income protection in your retirement.

In retirement, we all want to cover our basic needs while having enough money to enjoy our later years. Decades ago, it was easy to envision that retirement when employer-sponsored pension plans providing lifetime income were more common.

Today, income protection from a pension plan is much more difficult to find. According to the March 2021 National Compensation Survey from the Bureau of Labor Statistics (BLS), only 15% of private-sector workers now have access to a defined-benefit plan.

But here’s the good news: seeking lifetime income to support both your needs and wants in retirement doesn’t have to be a scavenger hunt. By asking the right questions, protecting what you value most, and seeking options that can provide income protection when you get there, the retirement of your dreams is actually possible.

What are you protecting?

When it comes to income protection, it’s not just about money. You’re really protecting a variety of necessities in retirement, such as your home, business, or vehicles.

But how will you also protect your quality of life? Your lifestyle, and especially your health can also be costly.  

According to the 2022 Retiree Healthcare Cost Estimate by Fidelity, the average American 65-year-old couple can expect to spend an average of $315,000 on healthcare expenses throughout retirement. So taking a holistic view of your financial plan is essential to ensuring you have enough income to last a lifetime.

What are the potential impacts?

There are several factors that can impact your wants and needs in retirement, as well as the amount of money you’ll need to help pay for them. Here are a few to keep in mind as you evaluate your future:

Longevity: while no one can predict their own life expectancy, you can evaluate your planned retirement age, health and wellness needs, and family history to get a better idea of how much time you expect to spend in retirement.

Inflation: the average rate of inflation is 3.8% per year. You can keep an eye on inflation trends to better understand how much your nest egg may be worth in the future compared to now.

Volatility: take time to evaluate your investments, your appetite for risk, and current market conditions to determine the potential impact on your retirement savings.

 

83% of people worry that their retirement savings may not be enough to live on

Is your savings enough for lifetime income?

Running out of money is a concern for many retirees. One way to help reduce that risk is by increasing your protected lifetime income. A tool to help bridge the gap between what you have and what you’ll need in retirement may help.

Our Retirement Expense & Income Calculator helps you project retirement expenses, then calculate the gap between essential expenses and guaranteed income, helping you make informed decisions about how to cover the gap.

If an income gap is identified the proposed solution can help you see how an annuity may help you address the gap in retirement.

 

Can an annuity provide income protection?

An annuity is a retirement product that may provide protected,* reliable income when you need it. It can help bridge the gap between the savings you’ve accumulated over time and traditional sources of retirement income, like Social Security. Plus, if you don’t need the income immediately, you can let it potentially grow tax deferred. That’s why an annuity may be a powerful addition to your financial plan.

Annuity options to help protect your income

All Jackson annuities offer some form of an income stream that you can rely on. Plus, you can choose from a variety of annuity products with income options that help meet your unique wants and needs.

  • Decide when you need retirement income: you can invest a lump sum and choose to start receiving payouts immediately or down the road.
  • Choose a product that’s right for you: we offer a variety of annuity products that may fit your specific retirement needs.
  • Customize your plan with unique options: discover how add-on benefits can guarantee income for life§ or help you leave a legacy.

Fixed annuity: a conservative option for growing your nest egg without exposing your assets to stock market volatility.

Fixed index annuity: the market may be a bumpy ride, but it's historically been up more than down. Our fixed index annuities allow you to take advantage of that growth without risking your retirement nest egg.

Registered index-linked annuity (RILA): flexibility to choose from multiple index options, crediting methods, and protection levels to help strike a balance between pursuing growth and partial downside protection.

Variable annuity: customize your assets across a wide range of investment options for potential growth. Add-on benefits, available for an extra charge, can provide some protection, guaranteed income for life, and legacy creation.

 

Contact your financial professional to learn more about how an annuity can help you find income protection in retirement.

Explore Jackson annuities here.

1Alliance for Lifetime Income, 2020 Protected Lifetime Income Study and Segmentation Report, October 26, 2020.

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

Tax deferral offers no additional value if an IRA or a qualified plan, such as a 401(k), is used to fund an annuity and may be found at a lower cost in other investment products. It also may not be available if the annuity is owned by a legal entity such as a corporation or certain types of trusts.

Add-on benefits that provide income for the length of a designated life and/or lives may be available for an additional charge. The amount of income that these benefits may provide can vary depending on the age when income is taken, and how many lives are covered when the benefit is elected. The cost of these benefits may negatively impact the contract's cash value. There is no guarantee that a variable annuity with an add-on living benefit will provide sufficient supplemental retirement income.

§On the contract anniversary on or immediately following the designated life’s attained age 59½, the for-life guarantee becomes effective provided: 1) the contract value is greater than zero and 2) the contract has not been annuitized. If the designated life is age 59½ on the effective date of the endorsement, then the for-life guarantee becomes effective on that date.

Annuities are long-term, tax-deferred vehicles designed for retirement and are insurance contracts. Variable annuities and registered index-linked annuities involve investment risks and may lose value. Earnings are taxable as ordinary income when distributed. Individuals may be subject to a 10% additional tax for withdrawals before age 59½ unless an exception to the tax is met. Add-on living 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. There is no guarantee that a variable annuity with an add-on living benefit will provide sufficient supplemental retirement income.

Jackson, its distributors, and their respective representatives do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used and cannot be used for the purpose of avoiding U.S. federal, state, or local tax penalties. Tax laws are complicated and subject to change. Tax results may depend on each taxpayer’s individual set of facts and circumstances. Clients should rely on their own independent advisors as to any tax, accounting, or legal statements made herein.

Guarantees are backed by the claims-paying ability of Jackson National Life Insurance Company or Jackson National Life Insurance Company of New York. For variable annuities, guarantees do not apply to the principal amount or investment performance of a variable annuity’s separate account or its underlying investments. They are not backed by the broker/dealer from which this annuity contract is purchased, by the insurance agency from which this annuity contract is purchased or any affiliates of those entities, and none makes any representations or guarantees regarding the claims-paying ability of Jackson National Life Insurance Company or Jackson National Life Insurance Company of New York.

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

Annuities are issued by Jackson National Life Insurance Company (Home Office: Lansing, Michigan) and in New York, by Jackson National Life Insurance Company of New York (Home Office: Purchase, New York).  Annuities are distributed by Jackson National Life Distributors LLC, member FINRA. These contracts have limitations and restrictions. Jackson issues other annuities with similar features, benefits, limitations, and charges. Contact Jackson for more information.

Jackson® is the marketing name for Jackson Financial Inc., Jackson National Life Insurance Company®, and Jackson National Life Insurance Company of New York®.