How to Live on Retirement Income

How do you live on retirement income?

That’s a big question. Fourteen thousand people a day are turning 65. That means fourteen thousand people a day are asking the same thing.

How do I live off this?
Where does the income come from?
How do I calculate it so I can live a good life in Chapter Two?

Chapter Two is retirement. And Chapter Two is about you.

Start with the Bedrock: Social Security

The sad truth is that many retirees are living only on Social Security.

Social Security was never meant to be the primary income source. It was meant to be ancillary. Secondary. A help.

But for many people, it is the primary.

The good news?

It’s the best inflation annuity on the planet.

It pays as long as you’re breathing. Period. End of story.

That’s your bedrock.

Other Guaranteed Income Sources

If you’re fortunate, you might also have:

• A pension
• IRA Required Minimum Distributions
• Dividend-paying investments
• Interest income

Only about 9% of the country has a pension anymore. Most are government workers.

But if you have one, that’s annuity income.

If you have an IRA, the IRS will tap you on the shoulder at RMD age and require you to take money out whether you need it or not.

That is income.

That is annuity-type income.

And yes, it’s taxable.

Define Your Income Floor

Before you do anything else, calculate your income floor.

What do you need to:

• Pay the bills?
• Live comfortably?
• Travel?
• Replace a car when needed?

That floor number is what matters.

Not hypothetical projections.

Not market upside.

Actual income hitting your bank account.

The 4% Rule Warning

Some advisors will say:

“Just withdraw 4%.”

Let’s think that through.

What if the market drops 20%?
You still withdraw 4%.

What if it drops again?
You still withdraw 4%.

That strategy has been debunked.

Markets guess. Advisors guess. They’re professional dart throwers.

What isn’t a guess?

Contractual guarantees.

Where Annuities Fit

You already own an annuity.

Social Security.

If you have RMDs, that’s annuity-type income.

If you have a pension, that’s annuity income.

Annuities are primarily used for:

• Lifetime income
• Principal protection

They are not market growth vehicles.

They are transfer-of-risk contracts.

The good news is that annuities for lifetime income are the only product that will pay as long as you’re breathing.

Regardless of how long you live.

And they can be structured so that 100% of unused money goes to beneficiaries.

Work Both Sides

Retirement planning is a two-headed monster:

• The annuity side
• The market side

On the market side, look at treasuries, bonds, dividend stocks, preferreds.

But if someone can’t explain it to a nine-year-old, don’t buy it.

Finance isn’t complicated.

People make it complicated.

The Bottom Line

Living on retirement income is about building a reliable income floor.

Start with Social Security.

Add pensions, RMDs, and interest income.

If needed, use annuities for guaranteed lifetime income.

Focus on guaranteed income hitting your bank account.

Not projections.

Not unicorns chasing butterflies.

Guaranteed income.

That’s how you live in Chapter Two.