If you already have a pension, it’s natural to wonder: do annuities still make sense?
The short answer? Sometimes yes — sometimes no.
It all depends on your goals, your income gap, and how much flexibility you want in retirement.
Let’s break this down clearly and simply.
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 our annuity calculator
First, Let’s Clear Something Up About Pensions
Many retirees don’t realize this:
Social Security is technically a pension.
It’s a lifetime income stream — in other words, an annuity.
So if you’re retired, you likely already have:
- Social Security (a pension-like income)
- Possibly a traditional pension
- Plus savings like a 401(k), TSP, IRA, or cash
The real question isn’t “Do I already have a pension?”
It’s “Do I have enough guaranteed income?”
When an Annuity May Not Make Sense
Annuities aren’t for everyone.
They may not make sense if:
- You already have more guaranteed income than you need
- Your goal is pure growth only
- You’re comfortable leaving all your money in the stock market
- You don’t care about market swings or lifetime guarantees
If income isn’t a concern, you may not need another pension-style asset.
When an Annuity Does Make Sense — Even With a Pension
Many retirees who already have pensions still use annuities strategically.
Here’s why 👇
1. To Fill an Income Gap
Most people come up short.
For example:
- $50,000 per year from pensions + Social Security
- But you need $70,000–$80,000 to live comfortably
An annuity can bridge that gap with guaranteed lifetime income.
👉 Want help figuring out your income gap? Schedule a call and I’ll walk you through it.
2. To Protect a Spouse
Many pensions:
- Reduce by 50% after death
- Or stop entirely when one spouse passes
An annuity can provide joint lifetime income, protecting the surviving spouse.
💡 Pro Tip: This is one of the most overlooked retirement risks for married couples.
3. To Create a “Personal Pension” From Savings
Let’s look at a real-world style example.
Scenario:
- Age: 62
- Married
- State: Illinois
- Investment: $400,000
- Income start: Age 70 (8-year deferral)
That $400,000 can generate roughly $54,000 per year for life — joint income.
That’s essentially like buying:
- A $1.4 million pension
- With just $400,000
- Guaranteed for life, even if you live past 95
👉 This is exactly what I help clients compare across carriers. Schedule a free consultation here.
Why Timing and Flexibility Matter
One of the biggest advantages of modern income annuities is flexibility.
You can:
- Plan to take income in 8 years
- Change your mind and take it in 3, 5, or 7 years
- Activate income whenever life demands it
That flexibility comes from income riders, which:
- Grow your benefit base at a guaranteed rate (often ~8%)
- Allow income activation at your discretion
Traditional pension-style annuities (SPIAs or DIAs) don’t usually allow that kind of control.
How the Guaranteed Growth Actually Works
This part confuses a lot of people.
Your income base grows — not necessarily your cash value.
Example:
- $400,000 deposit
- 8% guaranteed income growth
- Compounds yearly
- Grows to about $799,000 income base
That income base is then multiplied by a guaranteed withdrawal rate (around 6–7%).
That’s how the lifetime income is calculated.
And yes — there are rider fees.
But once the account balance runs out, fees stop and income continues for life.
Stock Market vs. Annuity: The Real Difference
Could you leave your money in the market and hope for 8%?
Sure.
But the difference is simple:
- Market returns are hope-based
- Annuity income is contract-based
One is optional.
The other is guaranteed.
Conclusion
✔ Yes — if you need more guaranteed income
✔ Yes — if you want to protect a spouse
✔ Yes — if you want flexibility and peace of mind
❌ No — if guaranteed income isn’t a concern at all
Most retirees I work with use annuities to:
- Fill income gaps
- Reduce stress
- Spend confidently on travel, family, and life
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