How to Create Your Second Social Security Pension Payment

A lot of people say they hate annuities, but they love Social Security. That is an interesting contradiction, because Social Security is the best inflation annuity on the planet. It pays for as long as you are breathing.

So, the real question becomes this. If you like Social Security so much, how do you create a second one?

The answer is simple. You use a Single Premium Immediate Annuity to create a second guaranteed lifetime income payment that works the same way.

Key Takeaways

Social Security is effectively an Immediate Annuity
A Single Premium Immediate Annuity can create a second lifetime income stream
Payments last as long as you are breathing
Income can be structured for single or joint life
Unused money can be contractually protected for beneficiaries

Why Social Security Is an Annuity

Social Security pays you for life. It adjusts for inflation. It does not stop unless you stop breathing.

That is exactly how an Immediate Annuity works, except one is issued by the government, and the other is issued by a life insurance company. Functionally, they are the same product.

If you want a second Social Security type payment, you need the private sector version of the same thing.

What Is a Single Premium Immediate Annuity?

A Single Premium Immediate Annuity is a simple contract. You give the insurance company a lump sum, and they agree to pay you income for life.

The commissions are low, the structure is straightforward, and many highly rated carriers compete aggressively in this space.

This is one of the most consumer friendly annuity products available.

How to Create the Income Payment

There are two ways to structure a second Social Security payment.

You can start with a lump sum and see how much lifetime income it will produce. Or you can start with a monthly income target and solve for how much money it takes to create that payment.

Both approaches work. The goal is the same, creating guaranteed income you cannot outlive.

Using Different Types of Money

You can purchase a Single Premium Immediate Annuity with different types of money.

Non-qualified money works. IRA money works, although the payments will be taxable. Roth IRA money works as well, which means the income can be tax free because taxes were already paid.

The source of funds matters and should be coordinated carefully.

Defining Your Income Floor

Before adding another income stream, you need to define your income floor.

Your income floor is the amount of guaranteed money that must hit your account every month to cover your bills and lifestyle. Social Security may cover part of it. Pensions, dividends, rentals, or side income may cover more.

If there is a gap, that gap can be filled with a Single Premium Immediate Annuity.

When Income Starts and How Long It Lasts

Income from an Immediate Annuity can start as soon as 30 days after the policy is issued. It can also be deferred for up to one year.

Once payments start, they last for life. If structured jointly, they last as long as either spouse is alive.

What Really Drives the Payout Amount

Interest rates matter, but they are not the primary driver of Immediate Annuity payments.

Life expectancy drives the pricing. The older you are, the higher the payment. The insurance company is betting on how long you will live. You are betting you will live longer.

That is how lifetime income works.

Protecting Your Beneficiaries

Many people worry that if they die early, the insurance company keeps the money.

That only happens with a life-only structure. Most people do not choose that.

Immediate Annuities can be customized so that if you die early, 100 percent of any unused money goes to your beneficiaries. The insurance company keeps nothing.

Final Thoughts on Creating a Second Social Security

If you love Social Security, you already love annuities. You just may not realize it.

A Single Premium Immediate Annuity allows you to replicate what Social Security does and create a second guaranteed lifetime paycheck.

If you want to see what it would take to create a second Social Security style payment, you can run Immediate Annuity quotes or schedule a conversation with The Annuity Man team to review your income floor and options.