3 Ways To Generate a Retirement Income That You Can’t Outlive

Shawn Plummer

CEO, The Annuity Expert

How much retirement money do I need? How can I live on my retirement income for the rest of my life without running out of money? Roughly 10,000 Americans search this topic monthly. 

We’ll go over 3 ways you can guarantee a retirement income that you can’t outlive.

The annuity is the only product that can guarantee you a lifetime income stream in retirement. Additionally, Social Security is the next best thing. Together they are an income powerhouse.

Luckily, you have 3 ways to utilize an annuity to generate a fixed income that can complement your social security income in retirement.

Related Reading: How to retire on 500k.

Immediate Annuity

This isn’t my favorite choice because of the lack of flexibility, but you will generate the highest income payments in most cases. An Immediate Annuity or SPIA is an insurance contract. The owner gives the insurance company a lump sum of money in exchange for an irrevocable but guaranteed fixed income stream (retirement income paychecks) for the rest of your life.

You can also utilize a deferred version called a Deferred Income Annuity (DIA).

Sweeping the Interest

Sweeping the interest is a long-time tactic where the retiree seeks the highest interest rate on a fixed annuity or Multi-Year Guaranteed Annuity (MYGA) and systematically withdrawals just the interest earned.

This strategy preserves the original investment and allows you to move that investment into another fixed annuity with a similar or higher interest rate when the contract expires.

Example:

You purchase a $100,000 fixed annuity that guarantees 3% annually for 5 years. 

You then set up systematic withdrawals to pocket the 3% fixed interest you’ve been guaranteed each year for 5 years. 

After the 5 years is up, you take the original $100,000 and purchase another fixed annuity with a similar or higher rate. 

Rinse and Repeat.

Purchasing an Income Rider on a Fixed Index Annuity

Most fixed index annuities can purchase a feature called an income rider, or the rider is built into the product.  The income rider then provides a guaranteed fixed income stream in retirement that you can’t outlive.  The income rider tends to provide less income than the Immediate Annuity but offers more flexibility.

Now you have 3 ways that you can guarantee a paycheck in retirement that you’ll never outlive.

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

Scroll to Top