Preparing for Retirement on a Low Income: What Actually Matters

This topic matters to me.

When I talk about preparing for retirement on a low income, I’m not talking from theory or textbooks. I grew up in North Carolina. We didn’t have a lot of money. My parents didn’t have a lot of money. My grandparents didn’t have a lot of money. I didn’t even know anyone with a lot of money.

That’s part of the reason I got into this business. I wanted to understand where the money was coming from and how people were actually pulling this off.

And here’s the first thing I want you to hear clearly.

You can prepare for retirement on a low income.

Income Level Is Not the Same as Discipline

A lot of people assume you need a high income to retire well. I don’t buy that.

Most people in this country are not high earners. The median household income is not some massive number. Yet people still manage to retire.

The common denominator isn’t income level. It’s discipline.

Saving consistently. Living within your means. Being realistic. Being frugal when you need to be. That matters more than flashy income.

Not Everyone Needs an Annuity Right Now

Let me say something that might surprise you, coming from The Annuity Man.

If you’re under 50 years old, you probably do not need an annuity.

If you’re under 50, stay in the markets. You don’t need an annuity. And if you think you’re the exception, you can email me and we’ll talk, but the overwhelming majority of people under 50 do not need one.

Annuities are about income. They’re not about accumulation.

Keeping Your Powder Dry While You’re Still Working

If you’re inching toward retirement, maybe five or ten years out, and you’re on a lower income, you still have options.

You don’t have to go all-in on the stock market. Despite what you’re told, you don’t have to be aggressive forever.

You can keep your money in places that don’t lose money. CDs. Treasuries. Municipal bonds. Money markets. What my friend Terry Savage calls “chicken money.”

It’s not that you’re a chicken. You just don’t want to lose money.

Risk Matters More as Retirement Gets Closer

As you approach retirement, risk becomes the enemy.

When you’re close to the finish line, you cannot afford a 20 or 30 percent drop. You don’t have time to recover. That’s why I always say, as you inch toward retirement, decrease the risk.

De-risk the portfolio.

Eventually, whether you’re high income or low income, you’re going to want less risk. One spouse usually gets there first. Eventually, both of you get there.

Creating Income When Retirement Starts

At some point, retirement stops being about saving and starts being about income.

That’s when annuities come into the conversation.

If you want guaranteed lifetime income, Single Premium Immediate Annuities are the most efficient way to do it. They’ve been around for hundreds of years. They’re simple. No market attachment. No moving parts. No annual fees.

They’re pension-style products. Pure transfer of risk.

You take a lump sum, and in return, you get income for life. For you, or you and your spouse.

Planning Income Ahead of Time

Some people want to plan ahead.

You might be in your early 50s and say, “We’re going to retire at 62. We want to know, to the penny, what our income will be.”

That can be done.

You can incrementally put money aside, similar to how you fund a 401k, and structure lifetime income to start in the future. The key is that you’re buying an annuity for what it will do, not what it might do.

The “will do” is the contractual guarantee.

What I Focus On

I don’t care about hypotheticals. I don’t care about projections. I don’t care about theoretical returns.

If you want market returns, stay in the market.

If you want lifetime income, annuities.

Annuities solve for four things: principal protection, income for life, legacy, and long-term care. In this conversation, we’re talking about income for life.

And yes, you can do this even on a low income.

Bottom Line

Preparing for retirement on a low income is not about luck or secret strategies.

It’s about discipline. Managing risk as you get closer. Understanding when income matters more than growth. And focusing on guarantees instead of hope.

That’s what actually matters.