Your Retirement Should Last a Lifetime. Your Income Strategy Should Plan for It.
Explore retirement income options, understand the potential role of annuities, and learn how different income sources may work together throughout your retirement years.
You've Worked to Build Your Savings. Now Consider How They May Support You.
A meaningful retirement income strategy is about more than a savings balance. It's about having the resources to support your lifestyle throughout the years ahead.
During retirement, regular employment income may be replaced by Social Security, pensions, personal savings, investment distributions, and other income sources.
Certain insurance annuities offer lifetime income features that may help address longevity concerns. Others focus on accumulation or specific financial objectives.
At Doctor for Financial Health, our goal is to help you understand these differences and consider how various income options may align with your goals.
Four Important Components of a Retirement Income Strategy.
A sustainable retirement approach should evaluate income reliability, available assets, financial risks, and changing needs.
Essential Expenses
Understand the monthly spending needed for housing, food, utilities, insurance, and other necessities.
Living Longer
Consider how your income and savings may support a retirement lasting several decades.
Access to Savings
Maintain an appropriate balance between committed income arrangements and accessible financial assets.
Changing Living Costs
Evaluate how rising prices may affect your purchasing power over time.
Survivor Planning
Consider how retirement income could change after the death of a spouse or other covered person.
Ongoing Evaluation
Review retirement objectives, income arrangements, and financial needs as life changes.
Where Might Your Retirement Income Come From?
Different income sources provide different levels of reliability, flexibility, and exposure to risk.
Can Fixed Indexed Annuities Provide Lifetime Income?
Certain fixed indexed annuities offer optional guaranteed lifetime withdrawal benefit riders, sometimes referred to as GLWBs.
These features can provide qualifying lifetime withdrawals under stated contract conditions, even in some circumstances when the contract's accumulation value has been depleted.
However, the income benefit base used in these calculations is generally not the same as the cash surrender value. Optional income riders may carry additional costs.
- Understand the guaranteed withdrawal percentage.
- Review the income starting age and conditions.
- Separate benefit-base values from cash value.
- Examine rider fees and contract charges.
- Understand how excess withdrawals affect guarantees.
- Review available spousal continuation provisions.
- Evaluate the issuing insurer's financial strength.
How Much of Your Monthly Spending Is Covered by Expected Income?
Explore your anticipated retirement expenses alongside Social Security, pension income, existing annuity income, and other sources.
Adjust the values to explore a hypothetical income comparison.
The coverage target is a planning percentage of the expenses you enter, not a recommended income allocation. This tool treats all entered income amounts as monthly estimates. It does not determine whether any income is guaranteed or whether a particular annuity is appropriate. Taxes, inflation, future changes, and insurer-specific payout terms are not calculated.
What Happens If You Live Longer Than Expected?
A long retirement can create opportunities for travel, family, personal interests, and meaningful experiences.
It can also increase the number of years your financial resources must support your expenses.
Certain lifetime income products may address a portion of longevity-related income risk. The appropriate approach depends on your circumstances.
- Evaluate retirement expenses over time.
- Consider increasing health care costs.
- Account for possible inflation.
- Understand survivor income arrangements.
- Review access to emergency savings.
- Examine the tradeoffs of income guarantees.
Income Guarantees Have Benefits. They Also Have Tradeoffs.
Before committing retirement assets to an income strategy, consider the entire contract and how it fits your needs.
Potential Benefits
- Contractually scheduled income payments.
- Available lifetime payment guarantees.
- Potential help addressing longevity concerns.
- Income that may complement Social Security and pensions.
- Some contracts offer spousal continuation options.
- Certain income arrangements can simplify cash-flow planning.
Important Considerations
- Liquidity may be limited or unavailable.
- Optional riders can have additional costs.
- Fixed payments may lose purchasing power over time.
- Beneficiary protections can affect payment amounts.
- Excess withdrawals may reduce rider guarantees.
- Guarantees depend on the issuing insurance company.
A Thoughtful Process for Important Retirement Decisions.
Understand
Discuss your retirement income needs, priorities, existing resources, and concerns.
Evaluate
Review income sources, spending needs, liquidity, and potential planning gaps.
Compare
Understand available income strategies, product features, costs, and restrictions.
Plan
Make informed decisions that reflect your financial circumstances and retirement goals.
Lifetime Income FAQs.
Explore common questions about retirement income guarantees and annuity payment options.
Can an annuity provide income for life?
Yes. Certain annuities offer lifetime income through annuitization or qualifying lifetime withdrawal benefit provisions. Exact guarantees and conditions vary by contract.
What is the difference between annuitization and an income rider?
Annuitization generally converts value into a contractually defined payment stream. An income rider on a deferred annuity may provide qualifying lifetime withdrawals while retaining an accumulation value under the contract's rules. Liquidity, ownership features, and costs differ.
Is an income benefit base the same as cash value?
Usually not. An income benefit base is commonly an accounting figure used to calculate certain rider benefits. It generally cannot be withdrawn as a lump sum or treated as the contract's cash surrender value.
Can lifetime annuity income continue to my spouse?
Some contracts offer joint-life or spousal continuation provisions. Payment percentages and eligibility conditions vary by the selected option.
Does guaranteed income increase with inflation?
Not necessarily. Level payments may lose purchasing power. Some products have increasing income options or other adjustments, which can affect the starting payment and overall contract terms.
What happens if my annuity's accumulation value reaches zero?
Under certain qualifying guaranteed lifetime withdrawal benefit riders, payments may continue after accumulation value reaches zero, provided all conditions have been met and no disqualifying withdrawals or other events have occurred.
Is lifetime annuity income suitable for everyone?
No. Suitability depends on retirement goals, assets, liquidity, family circumstances, time horizon, risk tolerance, tax considerations, and contract terms.
Your Retirement Income Deserves a Plan Built Around Your Life.
Whether you're approaching retirement, exploring lifetime income options, or reviewing an existing annuity contract, Doctor for Financial Health is ready to begin the conversation.
Information on this page is for general educational purposes and is not individualized financial, investment, legal, or tax advice. Annuities are insurance contracts issued by insurance companies. Lifetime income features, withdrawal percentages, rider fees, income commencement rules, survivor provisions, surrender periods, tax treatment, and guarantees vary by contract. Guaranteed lifetime withdrawal benefits may have restrictions on excess withdrawals and may not represent accessible cash value. Fixed income payments may lose purchasing power due to inflation. Guarantees depend on the claims-paying ability of the issuing insurance company. Annuities are not FDIC-insured. Not all annuities or income strategies are suitable for every individual. Availability varies by state and applicable requirements.