Retirees Want a Retirement Paycheck

"Cindy", a recently retired school administrator of 40 years, summed up what many Americans are feeling: "I don't miss working, but I do miss knowing a paycheck is coming every month."

Recent employee benefit surveys consistently show that retirement plan participants overwhelmingly want guaranteed lifetime income 'paycheck' options inside their retirement plans, similar to the pension benefits previous generations enjoyed.

As traditional pensions disappear, more retirees are looking for ways to create their own personal pension using a portion of their retirement savings. At the same time, annuity demand continues to surge, with LIMRA reporting record annuity sales and continued growth in fixed indexed annuities as Americans seek protected retirement income solutions.

The good news is that today's fixed and fixed indexed annuities can provide guaranteed income for life while protecting against market volatility.

Here's How -

Step 1: Understand the Retirement Income Challenge

Many retirees focus on growing their assets but overlook a more important question:

How do I create income that lasts as long as I do?

Living longer is a blessing, but it can create financial stress. A retirement lasting 25 or 30 years requires a dependable income strategy. Social Security helps, but for many households it is not enough to cover all retirement expenses.

That's where annuities can help by creating a guaranteed income stream that cannot be outlived.

Step 2: Consider Allocating a Portion of Your Assets

Suppose a 60-year-old places $200,000 into a fixed indexed annuity and delays income until age 70.

During those 10 years, the contract's income benefit base may grow significantly, depending on the product and rider selected. When income begins, the insurer calculates a lifetime payout based on age and contract terms.

Many retirees use annuities not for all of their retirement assets, but rather as a foundation that complements Social Security, investment accounts, and other savings.

Step 3: Understand the Role of Income Riders

An income rider is an optional benefit that can be added to certain annuities.

Think of it as creating a future pension.

The rider establishes an income benefit value used to determine future guaranteed payments. The larger that value becomes during the deferral period, the larger the potential lifetime income may be.

Benefits include:

• Guaranteed lifetime income

• Protection from longevity risk

• Rewards for delaying income

• Greater retirement income certainty

However, riders typically have fees, making it important to select one only if future income is part of your plan.

Step 4: Avoid the Most Common Mistakes

Research from LIMRA and the Society of Actuaries found that 50% to 70% of annuity owners who purchased income riders never turned the income on.  If you don't need income, why are you adding an income rider?

Another common mistake is waiting too long to activate income. Retirement researcher Wade Pfau notes that annuities generally become most valuable once payments begin because the insurance company continues paying even after you have received more than your original investment. In many cases, beginning income when retirement starts helps maximize the value of the guarantee.

Step 5: Learn How Taxes Work

Many people mistakenly believe an income rider creates annual taxes.

It does not.

The annuity grows tax-deferred, and taxes are generally due only when income or withdrawals are taken.

For non-qualified annuities purchased with after-tax dollars, part of each payment may be received tax-free through an IRS provision called the exclusion ratio, which treats part of each payment as a return of principal. For qualified accounts such as IRAs, distributions are generally taxed as ordinary income.

Step 6: Know What Happens If You Live Longer Than Expected

This is where lifetime income annuities shine.

Imagine investing $200,000 and, having it grow for 10 to 15 years and eventually receiving $400,000 or more in lifetime income over retirement. This is how actuarial science with economic fact works within the annuity structure, unlike any other investment vehicle.

Once you have recovered your original investment, the insurance company continues making payments for as long as you live. This protection against longevity risk is one of the primary reasons retirees choose guaranteed income solutions.

In other words, the longer you live, the more valuable the guarantee may become.

Naming Names: Best-In-Class Annuities (as of 7-1-26):

Which Companies Are Leading the Market?

While there is no universally recognized "best annuity," several companies consistently receive favorable reviews for lifetime income solutions, including Allianz, Athene, Nationwide, MassMutual Ascend, Global Atlantic, and Fidelity & Guaranty. Industry evaluations typically consider payout rates, rider design, financial strength ratings, and insurer stability.

Bottom Line: Six Actions for Guaranteed Lifetime Retirement Income Paycheck

1. Identify your income gap beyond Social Security.

2. Allocate a portion of retirement assets toward guaranteed income for life.

3. Evaluate whether an income rider fits your goals.

4. Turn income on when it supports retirement needs (personal choice).

5. Understand the tax treatment of your payouts, i.e., Income-Related Monthly Adjustment Amount (IRMAA).

6. Protect yourself against longevity risk.

Retirement is no longer just about building wealth. It's about converting wealth into dependable income. By following these six steps, you can create a personal pension, reduce financial uncertainty, and gain confidence that a paycheck can continue for as long as you do. In a world where traditional pensions are becoming rare, guaranteed lifetime income may be the closest thing to bringing them back.

Take the Retirement Paycheck Quiz: joesimon.solutions

Discuss more details with Joe Simon: js@joesimon.solutions