If you’re nearing retirement, you’ve probably heard the typical advice: reduce risk, move to safer investments, and protect what you’ve built.
But what if there was a strategy that actually lets you take MORE risk, while still protecting your retirement income?
That’s exactly what the right annuity strategy can do.
I’m John Stevenson, the Guaranteed Retirement Guy, and in this article I’ll show you how some retirees use annuities to create a stable income floor so they can invest the rest of their portfolio more aggressively.
And for many investors, this approach creates the best of both worlds: security and growth potential.
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
Why Most Retirement Advice Tells You To Avoid Risk
Traditional retirement advice focuses on protecting your portfolio.
You’ll often hear recommendations like:
- Move heavily into bonds
- Reduce exposure to stocks
- Use conservative withdrawal strategies
The reasoning is simple: when you stop working, your portfolio becomes your paycheck.
But there’s a major problem with this approach.
If you become too conservative, your portfolio may not grow enough to support a long retirement.
This is especially true if:
- You retire in your early 60s
- You live into your 90s
- Inflation keeps rising
You could be looking at 30+ years of retirement.
That’s why many wealthy retirees don’t eliminate risk entirely. Instead, they structure their income so they can handle volatility.
The Core Idea: Build a Guaranteed Income Floor
The strategy starts by securing your basic retirement income first.
This is typically done through:
- Social Security
- Pensions
- Income annuities
These sources create what I call an income floor.
That means your essential expenses are covered regardless of what the market does.
For example, imagine a retiree with $3 million in liquid assets.
They might allocate something like this:
- $1.5 million → Income annuity
- $1 million → Growth investments
- $500,000 → Cash reserves
The annuity could generate around $110,000+ per year in lifetime income, depending on age and rates.
Now their basic lifestyle is funded.
And that changes everything.
💡 Pro Tip: Once your core income is guaranteed, market swings become much easier to tolerate emotionally.
👉 Want help comparing the best annuity options? Schedule a call with me here.
Why Guaranteed Income Allows You To Take More Risk
Once you know your income is guaranteed for life, you can invest the rest of your portfolio differently.
Instead of worrying about withdrawals during market downturns, you can allow your investments to focus on long-term growth.
This means you might invest in things like:
- Broad stock market indexes
- Dividend stocks
- Private investments or startups
- Higher-growth sectors
Even if markets drop temporarily, your income still continues.
That dramatically reduces the pressure to panic sell.
As a result, many retirees actually become better long-term investors.
How Growth Can Rebuild Your Wealth Over Time
Let’s look at a simple example.
Suppose you invest $1 million in the market after securing your income.
If the portfolio averages 10% annually:
- After 7 years → nearly $2 million
- After 10 years → about $2.6 million
- After 12 years → roughly $3 million again
So even though you used part of your portfolio to create guaranteed income, your growth assets could eventually rebuild — or exceed — your original wealth.
Some investors go even further.
If returns average 15% through higher-risk investments, the portfolio could potentially grow to $5+ million over time.
This strategy allows you to spend income today while still building wealth for the future.
The Psychological Advantage Most Investors Ignore
One of the biggest benefits of this strategy is behavioral.
During market downturns, investors often panic.
They sell.
They move to cash.
They lock in losses.
But when you know your income is guaranteed, your mindset changes.
Instead of worrying, you think:
- “My income is still coming in.”
- “My bills are covered.”
- “The market will recover eventually.”
It feels similar to when you were younger and still working.
Back then, market dips didn’t matter as much because you still had a paycheck coming in.
Annuities recreate that same psychological safety net.
Why Many Wealthy Investors Still Use Annuities
Some critics argue that annuities limit growth.
But that comparison misses the point.
You’re not buying annuities for growth.
You’re buying them for contractual guarantees.
Even extremely wealthy individuals use this strategy because it provides:
- Predictable lifetime income
- Protection against market downturns
- Freedom to take risk elsewhere
In many cases, investors will even ladder annuities over time — adding additional contracts as their portfolios grow.
That way they increase income while still letting the rest of their assets compound.
👉 Want help building a retirement income strategy like this? Schedule a call with me here.
Conclusion
The real purpose of this strategy is balance.
You secure your retirement paycheck first.
Then you allow the rest of your portfolio to pursue growth.
This approach can help you:
- Reduce sequence-of-returns risk
- Stay invested during downturns
- Enjoy retirement income without fear
If you’re curious what this could look like for your portfolio, I recommend running the numbers yourself.
You can visit my website to use the annuity calculators and explore different scenarios.
Then, if you want help reviewing the options, I’d be happy to walk through them with you.
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