Most Common Source of Retirement Income

What is the most widely used source of retirement income?

We all know the answer.

It’s Social Security.

And whether people want to admit it or not, Social Security is an annuity.

In fact, it is the best inflation annuity on the planet.

Key Takeaways

Social Security is the most widely used source of retirement income
Social Security was designed as supplemental income, not total retirement income
Traditional pensions have largely disappeared
Most retirement savings plans are accumulation vehicles, not income guarantees
Retirement planning should focus on building an income floor
Lifetime income annuities can help fill retirement income gaps

Social Security Was Not Designed to Be Everything

Social Security was originally designed as a supplement.

Back when it was introduced, many people also had:

pensions
defined benefit plans
guaranteed lifetime income from employers

That world has mostly disappeared.

The Shift From Pensions to 401(k)s

Most companies replaced pensions with:

401(k)s
403(b)s
457 plans

These are accumulation plans.

They help you build assets.

But once retirement starts, it becomes your responsibility to turn those assets into income.

That’s the difference.

The Retirement Income Problem

A lot of people assume:

“I’ll just live off the interest.”

Or:

“I’ll follow the 4% rule.”

The problem is markets do not always go up.

People forget what down markets feel like because many younger advisors have only seen bull markets.

Retirement changes the conversation.

When you are no longer earning a paycheck, income stability matters more.

Why the Income Floor Matters

I always talk about the income floor.

That is the guaranteed money coming into your bank account every month.

The foundation usually includes:

Social Security
pension income, if you have one
annuity income
other guaranteed income streams

That floor gives you stability.

The Four Types of Lifetime Income Annuities

There are four main annuity types that can create lifetime income:

These products transfer the longevity risk to the insurance company.

That means they keep paying as long as you are breathing.

Carrier Strength Matters

For lifetime income, the carrier matters.

The rule is simple:

A+ rated or better.

You are relying on that company for income potentially decades into the future.

That matters.

Retirement Has Different Phases

There are really three phases of retirement:

Go-Go Years

You feel good.
You travel.
You move around.
You enjoy life.

Slow-Go Years

You slow down physically.
Things get harder.
But you are still active.

No-Go Years

Health declines.
Assistance may be needed.

That’s reality.

And your income needs to last through all three phases.

Stop Living With the IRS in Your Head

Too many people spend retirement worried about:

taxes
market swings
running out of money

At some point, you have to live your life.

There are no U-Hauls behind hearses.

The goal is sustainability.

Why Lifetime Income Is Becoming More Important

People are living longer.

Artificial intelligence and medical advancements may extend life expectancy even more.

That means the need for reliable lifetime income is only going to increase.

This is becoming one of the biggest retirement issues in the country.

Where to See Retirement Income Options

Once you know your income floor, the next step is figuring out whether there is a gap.

If there is, you can compare guaranteed lifetime income options using our annuity calculators here: https://www.stantheannuityman.com/ annuity-calculator/