How to Create Lifetime Income Without Relying Solely on Social Security

SAN ANTONIO, TX / ACCESS Newswire / January 30, 2026 / For millions of Americans approaching retirement, Social Security represents the foundation of their income plan. Yet relying solely on these benefits leaves retirees vulnerable to a troubling reality: the average Social Security check replaces only about 40% of pre-retirement income, according to the Social Security Administration-far short of the 70-80% most financial experts recommend.

The question isn’t whether Social Security will be part of your retirement income strategy. The question is: what will fill the gap?

The Income Gap Most Retirees Face

Social Security was never designed to be anyone’s sole source of retirement income. When the program launched in 1935, it served as a safety net supplement to pensions and personal savings. Today, with traditional defined benefit pensions covering only about 15% of private sector workers according to the Bureau of Labor Statistics-down from 35% in the 1990s-the pressure on Social Security has intensified.

Research suggests that many American households face the risk of running short of money in retirement. The challenge isn’t just about having enough saved-it’s about converting those savings into reliable income that lasts as long as you do.

This is where longevity risk becomes critical. A 65-year-old couple today has a 50% chance that at least one spouse will live to age 92, according to the Society of Actuaries. That’s potentially three decades of expenses to fund, with inflation eroding purchasing power along the way.

Three Proven Strategies for Guaranteed Income

Financial advisors who specialize in retirement income planning typically recommend diversifying income sources across multiple guaranteed and non-guaranteed streams. Here are three foundational approaches:

1. Systematic Withdrawal Strategies

The most common approach involves drawing down retirement accounts-401(k)s, IRAs, and taxable investment accounts-using a calculated withdrawal rate. The traditional “4% rule,” introduced by financial planner William Bengen in 1994, suggests withdrawing 4% of your portfolio in the first year of retirement, then adjusting for inflation annually.

However, this strategy comes with sequence-of-returns risk. If markets decline early in retirement, withdrawals can deplete your portfolio faster than anticipated. Research from Morningstar suggests that a 3.3% withdrawal rate may be more sustainable in today’s market environment for a 30-year retirement with high confidence levels.

While this approach offers flexibility, it doesn’t provide guarantees. Your income fluctuates with market performance, and there’s always the risk of outliving your assets.

2. Income Annuities and Guaranteed Income Products

Income annuities function as personal pension plans, converting a lump sum into guaranteed lifetime payments. When you purchase an immediate annuity, you transfer longevity risk to an insurance company, which promises to pay you a set amount for life-regardless of how long you live or how markets perform.

A 65-year-old man investing $100,000 in a single premium immediate annuity might receive approximately $650-$750 monthly for life, depending on prevailing interest rates at the time of purchase. For couples, joint-and-survivor options ensure payments continue as long as either spouse is alive, though monthly amounts are typically lower.

Deferred income annuities work similarly but start payments at a future date-often 10-20 years after purchase. This delay allows for higher payout rates since the insurance company has more time to invest your premium.

Fixed indexed annuities offer a middle ground, providing principal protection with growth potential linked to market indexes, plus optional guaranteed lifetime withdrawal benefits. According to LIMRA, annuity sales reached record levels in 2023, exceeding $385 billion, with fixed indexed annuities among the fastest-growing categories.

It’s important to note that annuity guarantees are subject to the claims-paying ability of the issuing insurance company. Working with highly-rated carriers and understanding state guaranty association protections is essential. These protections vary by state but typically provide coverage up to $250,000 in annuity account value, with some states offering higher limits.

3. Bond Ladders and Fixed Income Portfolios

For retirees who prefer maintaining control of their assets, bond ladders offer another path to predictable income. By purchasing individual bonds with staggered maturity dates, you create a schedule of interest payments and principal returns.

Treasury Inflation-Protected Securities (TIPS) add inflation protection, adjusting principal values based on the Consumer Price Index. Municipal bonds can provide tax advantages for higher-income retirees, though yields are typically lower than taxable bonds.

The challenge with bond strategies in today’s environment is yield. With interest rates fluctuating, the income generated from conservative bond portfolios may not keep pace with inflation or meet retirement income needs without drawing down principal.

Building Your Personal Income Floor

Most successful retirement income plans don’t rely on a single strategy. Instead, they layer multiple income sources to create what financial planners call an “income floor”-guaranteed sources that cover essential expenses-topped with discretionary income from investments that can fluctuate.

A typical structure might look like this:

Social Security covers basic living expenses. A portion of retirement savings funds an income annuity to guarantee additional essential income. Remaining assets invest for growth, providing inflation protection and discretionary spending. Emergency reserves stay liquid for unexpected expenses.

The specific allocation depends on individual circumstances: risk tolerance, health status, other guaranteed income sources, legacy goals, and total asset base.

Tax Considerations Matter

The IRS treats different income sources differently. Social Security benefits may be partially taxable depending on your combined income-up to 85% of benefits can be subject to income tax. Withdrawals from traditional IRAs and 401(k)s are taxed as ordinary income, while qualified Roth distributions are tax-free. Annuity payments are split between taxable earnings and tax-free return of principal using what’s known as the exclusion ratio.

IRS Publication 575 provides detailed guidance on pension and annuity income taxation. Strategic sequencing of withdrawals from different account types can significantly impact your after-tax retirement income, making tax planning an essential component of any comprehensive income strategy.

The Fiduciary Standard Matters

When working with financial professionals to implement guaranteed income strategies, understanding their regulatory obligations is crucial. Under Department of Labor fiduciary rules, advisors managing retirement accounts covered by ERISA must act in your best interest. The SEC’s Regulation Best Interest requires broker-dealers to meet enhanced standards when recommending securities.

For annuity recommendations specifically, FINRA Rule 2330 requires suitability determinations for variable annuities that consider your financial situation, investment objectives, and the product’s features and costs. Many states have adopted the NAIC’s model regulation requiring insurance agents to act in the customer’s best interest when recommending annuity products.

Taking Action

Creating lifetime income beyond Social Security requires careful planning and usually works best when started 5-10 years before retirement. This timeline allows you to:

Assess your projected income gap between expenses and guaranteed sources. Evaluate different guaranteed income products and strategies. Optimize Social Security claiming strategies-delaying benefits from age 62 to 70 can increase your monthly payment by up to 76%. Implement tax-efficient withdrawal sequencing. Adjust your plan as circumstances and regulations change.

The retirement income landscape has grown increasingly complex, but the fundamental goal remains simple: ensuring you never outlive your money while maintaining the lifestyle you’ve worked decades to achieve.

Author Bio

Gary Jensen is a retirement income specialist with AnnuityVerse, an independent advisory firm that has helped retirees navigate income planning decisions since 2001. With access to 40+ insurance carriers and licenses across five states, AnnuityVerse provides unbiased guidance for individuals approaching or in retirement. Learn more at AnnuityVerse.com.

Compliance & Regulatory Disclosures

This article is for educational purposes only and does not constitute financial, tax, or legal advice. Annuity guarantees are subject to the claims-paying ability of the issuing insurance company. State guaranty association protections vary by state and have coverage limits. Consult with a licensed financial professional and tax advisor before making retirement income decisions. Past performance does not guarantee future results.

Media Contact:
Company Name: AnnuityVerse
Contact Person: Gary A. Jensen MBA, CFP®
Email: info@annuityverse.com
Phone: (915) 920-4279
Website: https://annuityverse.com

SOURCE: AnnuityVerse

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