Annuities

The Retirement Income Strategy That Guarantees You Will Never Run Out of Money

A well-designed annuity strategy can guarantee your essential retirement expenses for life. Here is how to build a retirement income plan that uses annuities correctly.

🇺🇸 Patriot Plans Editorial Team·9 min read·August 1, 2026

The biggest financial risk in retirement is not losing money — it is outliving your money. An annuity strategy that guarantees your essential expenses for life eliminates that risk. Here is how to build one.

The Floor-and-Upside Strategy

The floor-and-upside strategy divides your retirement income into two buckets: the floor (guaranteed income from Social Security, pension, and annuities that covers essential expenses) and the upside (investments that provide growth and discretionary spending). The floor ensures you can always cover housing, food, and healthcare.

Calculating Your Income Floor

Add up your essential monthly expenses: housing, food, utilities, healthcare, transportation, and insurance. That is your income floor. Social Security and any pension income count toward the floor. The gap between your floor and your guaranteed income is what an annuity should cover.

Choosing the Right Annuity

For the income floor strategy, a fixed indexed annuity with a lifetime income rider is typically the best choice. It provides principal protection, market-linked growth during the accumulation phase, and guaranteed lifetime income when you turn on the income rider.

The Timing Decision

The longer you defer annuity income, the higher the guaranteed payout. Deferring from age 65 to 70 can increase the annual income by 30-40%. If you can cover expenses from other sources for 5-10 years, deferring annuity income can significantly increase your lifetime income.

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Frequently Asked Questions

How much of my retirement savings should I put in an annuity?

A common guideline is to annuitize enough to cover essential expenses after Social Security. For most people, that is 20-40% of retirement savings. The rest stays invested for growth and discretionary spending.

What happens to my annuity when I die?

Most annuities have death benefit provisions that pay remaining value to beneficiaries. Income riders typically have joint and survivor options that continue income to a surviving spouse. Ask about death benefit options when comparing annuities.

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