Reframing retirement income for greater certainty

For more than a decade, the dominant retirement narrative was straightforward: Accumulate as much as possible, stay invested and let compounding do the work. That mindset served savers well during a sustained bull market.

But as we mark Annuity Awareness Month, a meaningful shift is underway among Americans approaching retirement. The question is no longer “How much have I saved?” It is “How do I turn what I’ve saved into income I can count on for life?”

This question is not a product decision, but rather the design of an integrated income strategy — one that brings together investments, insurance, tax considerations and client priorities into a cohesive plan.

That shift — from accumulation to income security — is reshaping advisor conversations.

The hidden risk within ‘growth at all costs’

For a preretiree with a long investment horizon, having most of their nest egg in tax-deferred accounts without other income sources creates a vulnerability: sequence-of-returns risk. A market downturn in the early years of retirement — when withdrawals begin — can permanently impair financial security.

Guaranteed income solutions can help address this risk by providing a portion of retirement income through guarantees backed by the claims-paying ability of the issuing insurer.

Staying invested without fear

When essential expenses — housing, utilities, healthcare and basic living costs — are covered by a combination of Social Security and reliable income sources such as annuities, clients no longer need to hold their entire portfolio in a defensive posture driven by anxiety.

For some clients, protected income may help support a broader investment strategy by reducing pressure to draw from growth-oriented assets during periods of volatility.

From a planning standpoint, this is less about replacing investments and more about creating flexibility to invest more intentionally elsewhere in the portfolio.

Mortality credits can allow insurers to deliver income that may compare favorably to traditional fixed-income alternatives. It is one of several factors advisors evaluate when determining whether an annuity fits within a client’s overall strategy.

Aligning income strategy with client objectives

Annuities encompass a range of meaningfully different tools for different objectives. The role they play should always be determined within the context of a comprehensive financial plan — not in isolation.

Income annuities, whether immediate or deferred, can convert a portion of assets into predictable lifetime income. For some clients, this may complement Social Security timing or other guaranteed income sources within a broader plan.

For some high-net-worth clients, these strategies may support broader planning goals, including tax considerations and portfolio diversification, depending on individual circumstances.

Fixed indexed annuities with income features may offer protected income features and limited growth potential, depending on contract terms.

For couples, joint income solutions can help ensure continuity of income for a surviving spouse.

In practice, the key question is not whether to use annuities, but what portion — if any — of a client’s essential expenses should be covered through guaranteed income as part of an integrated strategy.

Confronting the misconceptions

Two persistent myths often prevent clients from fully evaluating these tools.

The first is that annuities are too expensive or too complex. In reality, cost and structure vary significantly, and part of an advisor’s role is helping clients understand those differences in a clear and objective way.

The second is that using annuities eliminates flexibility. While that may be true in certain cases, many solutions today offer varying levels of liquidity and control. The key is understanding the trade-offs and making informed decisions within the context of a broader financial plan.

The role of the advisor

The current environment — defined by longevity risk, inflation uncertainty and evolving market expectations — makes thoughtful income planning more important than ever.

Strategies that integrate both investments and reliable income sources can improve the durability of retirement outcomes. However, the value is not in the product itself — it is in how those tools are integrated into a disciplined, client-specific plan.

Advisors who lead with planning, provide transparency around costs and trade-offs, and prioritize client education are best positioned to deliver meaningful long-term value.

The goal is not to sell an annuity. It is to build a retirement income strategy that allows clients to live well, stay appropriately invested and have confidence that their income will endure.

When approached through that lens, tools such as annuities can play an important — but deliberate — role in helping clients move from uncertainty to resilience.

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Jim LaPinska CFP, is CEO, partner and private wealth advisor at Axiom Wealth Management (Northwestern Mutual Private Client Group). Contact him at [email protected].