One of the most important steps to enjoying a stress-free and financially secure retirement is having a well-planned retirement budget — and making sure that budget is supported by reliable, guaranteed income. While investment accounts can offer growth, they also bring uncertainty. That’s where fixed annuities can play a powerful role, giving retirees predictable income for life or a set period of time.
In this article, we’ll walk through how to set up a retirement budget, why guaranteed income matters, and how a fixed annuity can help you stay on track, no matter what happens in the market.
Why Your Retirement Budget Matters More Than Ever
When you’re working, your income comes from your job. In retirement, your income comes from a combination of Social Security, savings, investments, and potentially pensions or annuities. Without a solid budget, it’s easy to overspend — or worse, become paralyzed with fear that you’ll run out of money.
A clear retirement budget provides:
- A roadmap for your spending
- Confidence in your lifestyle choices
- A better understanding of how much guaranteed income you need
Step 1: Identify Your Retirement Expenses
Start by organizing your retirement expenses into two simple categories:
Essential Expenses
These are your non-negotiables — the must-pay bills that keep your lifestyle going:
- Housing (rent/mortgage, property taxes, maintenance)
- Utilities
- Groceries
- Transportation
- Health insurance and out-of-pocket medical costs
- Insurance (home, auto, health, etc.)
Discretionary Expenses
These are “nice-to-have” items — enjoyable but optional:
- Travel and vacations
- Dining out
- Hobbies
- Gifts to family or charities
- Entertainment
By separating expenses this way, you’ll know exactly how much guaranteed income you need to cover your basics — and how much flexibility you have for fun.
Step 2: Add Up Your Reliable Income Sources
Next, look at the income you’ll have coming in on a regular basis. These are the sources you can count on:
- Social Security benefits
- Pension payments (if applicable)
- Fixed annuity payments (we’ll cover this in more detail below)
- Rental income or other consistent income streams
If these guaranteed sources don’t cover your essential expenses, that’s a retirement income gap — and that’s where a fixed annuity can come in.
What Is a Fixed Annuity?
A fixed annuity is a financial product offered by an insurance company that provides a guaranteed interest rate for a set period and/or guaranteed income for a set number of years or for life.
It’s designed to offer safety, predictability, and income stability, which is why many retirees use them to cover essential living costs.
There are two common types of fixed annuities:
- Multi-Year Guaranteed Annuities (MYGAs): These offer a guaranteed interest rate for a set period (e.g., 3, 5, or 10 years).
- Fixed Annuities with Income Riders: These allow you to turn a lump sum into guaranteed income for life, often with built-in flexibility.
Step 3: Use a Fixed Annuity to Cover Your Retirement Income Gap
Once you’ve identified your income gap (essential expenses minus Social Security and other income), you can decide how much of your retirement savings you want to allocate toward a fixed annuity.
Example:
Let’s say your essential monthly expenses are $4,000. You receive $2,500/month from Social Security. You’re short $1,500/month.
To cover that $1,500 gap, you could use a fixed annuity that pays you $1,500 every month — guaranteed, for life or for a set number of years. That way, you’re not relying on the stock market or constantly guessing how much to withdraw.
Benefits of Using a Fixed Annuity for Guaranteed Income
✅ Income You Can’t Outlive
Many fixed annuities can be structured to pay you for as long as you live — removing one of the biggest fears in retirement.
✅ Protection from Market Losses
Fixed annuities are not tied to the stock market. Your principal and interest rate are guaranteed (as long as the insurer is financially sound).
✅ Simple and Predictable
You know exactly how much income you’ll get, and when. This makes monthly budgeting much easier.
✅ Optional Inflation Adjustments
Some fixed annuities offer riders or features that increase your payments over time to help keep up with inflation.
Step 4: Keep Flexibility with a Hybrid Strategy
While fixed annuities offer security, you don’t have to put all your money into one. Many retirees use a hybrid approach:
- Use fixed annuities + Social Security to cover essentials.
- Use investment accounts and cash reserves for discretionary expenses and long-term growth.
This allows you to enjoy income peace of mind while maintaining flexibility and control over part of your portfolio.
Step 5: Review Your Plan Annually
Life changes — and so should your plan. Set a time each year to review your:
- Spending and budget
- Annuity income performance
- Investment portfolio
- Healthcare needs
If necessary, adjust your budget or income sources to reflect changes in expenses or goals.
Common Questions About Fixed Annuities
❓ What happens to my money if I pass away early?
Many fixed annuities offer death benefit options or period certain payouts that continue to your beneficiaries.
❓ Are there fees?
Most fixed annuities don’t have annual fees, but some riders (like inflation protection or lifetime income) may have associated costs. Be sure to ask for clear, written disclosures.
❓ How do I choose the right annuity?
Work with a fiduciary advisor or a trusted insurance professional to compare products, interest rates, and insurer ratings. Choosing the right annuity depends on your goals, timeline, and risk tolerance.
Final Thoughts: Retirement Security Starts with a Plan
Retirement isn’t just about how much you’ve saved — it’s about how confidently and comfortably you can live. By building a solid retirement budget and using a fixed annuity to guarantee income, you can protect your lifestyle and sleep better at night.
You deserve a retirement that feels secure, not stressful.
Ready to explore how a fixed annuity could fit into your retirement plan?
Let’s talk. We’ll help you create a clear, personalized strategy that supports your budget and gives you the confidence to enjoy retirement on your terms. You can have a no-cost, no-obligation chat with one of our approved Academy Partners HERE.