A paycheck you cannot outlive

The number on a statement is not a plan. It is inventory. The plan is whether the lights stay on, the property tax gets paid, and a surviving spouse can remain in the house without calling the children in a panic.

That is a paycheck problem. Social Security is one paycheck. A pension, if you have one, is another. Everything else is a hope that withdrawals from savings will behave. Some years they do. Sequence-of-returns risk is the year they do not — a bad market early in retirement, paired with withdrawals, from which the account never quite recovers.

Cover the floor first

A useful way to think about it: list the expenses that must be paid in a dull year. Housing, food, insurance, the basics of the life you already live. Then list income that does not depend on a market. The difference is the gap.

An income annuity — a SPIA, a deferred income annuity, or a living-benefit rider on a fixed or indexed contract — is one way to fill that gap. You are exchanging premium for a promise from an insurer. The promise is only as strong as the company, which is why independence (the ability to shop more than one) matters.

You do not need to annuitize everything. You need to annuitize enough.

Enough is the floor. Discretionary spending can stay flexible. That is a more adult conversation than “annuities are good” or “annuities are bad.” They are a tool. Used for the wrong job, they disappoint. Used to buy a paycheck you cannot outlive, they do something savings alone cannot promise.

Guarantees depend on the issuing insurer. Annuities are insurance contracts with terms, riders, and surrender charges. This is education, not a recommendation of any product.