I’m not retired yet, but I already know what I want from my retirement income strategy: dependable lifetime income and the freedom to keep growing my other investments. I don’t want every market decline to make me question whether I can keep spending.
The approach I would use is straightforward. I would use annuities to create my own pension income, then invest a separate portion of my money for growth.
Need help choosing the best annuity for your unique situation? Have questions about getting an annuity? If so, it’s best to speak with an annuity specialist. Watch this short video to see how I can help you do this (at no cost to you!)
Tip: See how much an annuity could pay you using my annuity calculator
1. Why I Would Use Annuities for Retirement Income
Let me be upfront: I make my money selling annuities, and I earn commissions when people purchase them through me. I’m biased, but I also use annuities in my own retirement planning.
What appeals to me is the contractual guarantee. I like having income arranged in advance so I don’t have to keep making investment decisions just to maintain that income.
That doesn’t mean I think annuities are the only way to fund retirement. I’ll probably own dividend stocks, and I might consider a bond portfolio, although interest rate risk gives me pause.
I’ve also owned rental properties, but I don’t enjoy dealing with tenants. Real estate can be a great investment; it simply isn’t how I want to generate my retirement income.
For me, annuities offer the kind of pension-style income I want. With that foundation in place, I feel more comfortable keeping other money invested in the stock market.
2. What Could $500,000 Provide in Lifetime Income?
In the video above, I illustrated a scenario for someone aged 55 in Nebraska who puts $500,000 into an annuity and starts joint lifetime income at age 62. I used a spouse who is four years younger, reflecting the age difference between my wife and me.
With that seven-year waiting period, the calculator showed these approximate annual income amounts at the time of recording:
- Midland: $58,000
- North American: $55,000
- Athene: $53,000
- Corebridge: $52,000
- Nationwide: $49,000
- Prudential: $48,000
Midland showed the highest payout in that particular comparison. That is a snapshot of the illustration, not a promise that the same carrier or payout will apply when you look.
Your age, your spouse’s age, your state, the contract, and when you begin income can change the results. These figures represent illustrated annual income payments, not investment returns.
I often view ages 50 to 60 as a useful window for people planning to defer income. But I also work with people buying annuities in their 60s and 70s, so the right timing depends on when you need the money.
💡 Pro Tip: Compare contracts using the same ages, deposit amount, income start date, and joint or individual income selection. Otherwise, you may be comparing very different scenarios.
👉 Visit johnstevenson.com to use my calculators and explore income options for your situation.
3. Why I Would Consider Waiting Until 65
Personally, I would probably look at starting income at 65 instead of 62. That means putting in the same $500,000 at 55 and waiting 10 years.
With that longer waiting period, the illustrated joint lifetime income increased to approximately $77,000 a year.
Joint income matters to me because I want my wife to continue receiving income if I die first. Under the lifetime income provisions illustrated, payments can continue even if the account balance reaches zero, subject to the contract’s terms.
Now suppose I eventually receive $43,000 a year from Social Security. Combined with the illustrated $77,000 annuity payment, that would total:
- Annuity income: $77,000 annually
- Assumed Social Security income: $43,000 annually
- Combined income: $120,000 annually, or $10,000 monthly before taxes
The Social Security amount is an assumption for the example, not a benefit estimate for everyone.
In the same illustration, increasing the annuity deposit to $1 million would double the annual annuity income to approximately $154,000, before adding Social Security.
I expect to keep working beyond 65, possibly much longer. But I wouldn’t necessarily postpone taking retirement income until I stop working, because I also want the cash flow to help my kids and other people.
4. How I Would Separate Income From Growth
A traditional 60/40 portfolio with a 4% withdrawal approach can be a reasonable retirement strategy. But that withdrawal approach is not a contractual lifetime income guarantee.
My preference is to give different portions of my money different jobs:
- Income: Use an appropriate amount to establish pension-style lifetime payments.
- Growth: Keep a separate portion invested in stocks or the S&P 500.
- Future income: Consider using some investment growth to purchase additional income later.
I wouldn’t expect one investment to deliver the highest income, the strongest guarantees, and the greatest growth all at once.
With my income foundation established, I would feel more comfortable accepting volatility in the growth portion. That doesn’t guarantee stock returns or eliminate investment losses, but it changes how I feel about staying invested.
For me, that emotional benefit is a major part of the strategy. Having income coming in feels more like having a paycheck, which makes it easier to avoid treating every market decline as a threat to my retirement spending.
I still want to grow my investments as I age. Retirement doesn’t mean I suddenly lose the desire to make progress.
5. How I Would Compare My Annuity Options
Before buying, I would want to see the available choices. That’s why I encourage people to start with the calculators on my website.
I wouldn’t choose a contract simply because a payout looked impressive in someone else’s example. I would compare the income start date, survivor benefits, and contract terms against what I actually want the money to accomplish.
Annuity guarantees depend on the issuing insurance company’s claims-paying ability and the terms of the contract. The goal is to understand what you are purchasing and how it fits your income plan.
👉 Want help comparing annuity options? Visit johnstevenson.com to schedule a call with me.
Conclusion
The retirement income strategy I would use today is about assigning a clear purpose to my money. I want contractual lifetime income for dependable cash flow and separate investments that can continue growing.
Start by seeing what the numbers look like for you. Then, if you want help comparing contracts or purchasing an annuity, schedule a Zoom call with me.
There won’t be a pushy sales conversation. I’ll answer your questions, help you compare the options, and let you decide whether an annuity fits your plan.
Need help with finding the best annuity for your retirement?
Click here to schedule a call with me.
On the call, I can help you:
- Determine what type of annuity is best for you
- Find the highest paying annuities for your unique situation
- Answer any other questions you may have