Where Will My Retirement Income Come From?

Where will your retirement income come from?

Good question.

Let’s start with the basics.

The first place is Social Security.

Social Security is the best inflation annuity on the planet because it is political, not actuarial.

It was not designed to be 100% of your retirement income, but for a lot of people, that’s what it has become.

Key Takeaways

• Retirement income can come from Social Security, pensions, IRAs, savings, rental income, and side income
• Social Security is an annuity-style income stream
• Lifetime income annuities can create pension-style income
• Roth IRA annuity income can be tax free under current rules
• If you have enough assets, you may not need to annuitize anything
• The goal is to use the least amount of money needed to contractually solve the income gap

Start With Social Security

Social Security is the income source most people already have.

It pays for life.

It can adjust for inflation.

It is already an annuity-style income stream.

That’s why I always say, if you hate all annuities, you better hate Social Security too.

Other Retirement Income Sources

Your retirement income can also come from:

• Pension income
• Required Minimum Distributions
• IRA assets
• Roth IRA assets
• Savings accounts
• Rental income
• Side income
• Interest income

Add all of that up first.

That is your starting point.

Build Your Income Floor

The next step is defining your income floor.

That means the amount of money you need coming in every month to live your life.

Not just survive.

Live.

Once you know that number, compare it to the income sources you already have.

If there is no gap, you may not need an annuity.

If there is a gap, that’s where planning starts.

What If You Have Enough Assets?

Some people do not need to annuitize anything.

If you have enough money, you might simply live off the interest.

If your asset base is large enough and your income need is modest enough, that may work.

You do not need to force an annuity where it does not fit.

When Lifetime Income Annuities Fit

If your current income sources do not cover your income floor, then lifetime income annuities can come into play.

There are four main types:

• Single Premium Immediate Annuities
• Deferred Income Annuities
• Qualified Longevity Annuity Contracts
• Income Riders

These can provide income for as long as you are breathing.

Protecting the Principal

A common misconception is:

“If I buy an annuity and die, the insurance company keeps the money.”

That does not have to be true.

You can structure the annuity so that **100% of any unused money goes to your **beneficiaries.

The annuity company is still on the hook to pay for life, but the remaining money can be protected for your family.

Using IRA or Roth IRA Money

If you have IRA money, a Qualified Longevity Annuity Contract may be an option.

QLACs were created so IRA assets could be used for future lifetime income.

If you have Roth IRA money, you can also use that for lifetime income, and under current rules, the income can be tax free because the taxes were already paid upfront.

Be Careful With the 4% Rule

Do not blindly assume the 4% rule solves everything.

If the market drops 20% and you still take out 4%, now you are down even more.

That can permanently damage the plan.

Market withdrawals are not the same as contractual lifetime income.

Use the Least Amount Needed

Here’s the key.

The goal is not to put all your money into annuities.

The goal is to use the least amount of money needed to solve the income gap contractually.

If you need $1,000 per month for life, we reverse engineer the quote to solve for that number.

That’s how this should work.

Where to See Your Income Options

Once you know your current income floor, the next question is:

What would it take to fill the gap with guaranteed income?

That’s something you can model using our annuity calculators here: https://www.stantheannuityman.com/ annuity-calculator/

The Bottom Line

Your retirement income can come from a lot of places.

Social Security.

Pensions.

IRAs.

Savings.

Rental income.

Interest.

Annuities.

The real question is whether those sources cover the life you want to live.

If they do, great.

If they do not, lifetime income annuities can help fill that gap contractually.