7 Smart Ways to Secure Guaranteed Retirement Income

Retired couple smiling at a laptop in their kitchen

Chris Ryan / Caiaimage / Getty Images

It might seem like an intimidating challenge at first glance, but you have numerous options for guaranteeing retirement income. Some are more suited to long-term planning, but others can be last-minute moves just before you pull the plug on working. Your best results might come from a combination of both.

  • Your options for securing your income in retirement can vary depending on whether you're young and just beginning to save or you're looking for a plan later in life.
  • Annuities can provide you with money now or in the future. You can make the choice.
  • Taking out a reverse mortgage can help if you've paid off your first mortgage or if you've built up substantial equity in it.
  • A major factor in retirement income planning involves avoiding some common Social Security pitfalls.

Buy an Immediate Annuity

What’s the easiest way to achieve guaranteed retirement income? Buy it. This is exactly what you do when you purchase an immediate annuity. You use a lump sum of money to purchase guaranteed income.

You can choose an option where the income will pay out for your entire ​lifetime or for joint lifetimes if you're married. The purchase could be the deal of a lifetime for aspiring centenarians! There's no way you can outlive your income with an immediate annuity.​

As the name implies, "immediate" means the income starts right away, so the best time to look at this option is when you're ready to retire. You want an income source that will begin immediately. Exactly how much monthly income you can receive depends on your age. The older you are, the higher the income you'll get per dollar that you invest.

Use a Withdrawal Benefit Rider on a Deferred Annuity

Look for an annuity that has a guaranteed minimum withdrawal benefit rider (sometimes called a GMWB) or a lifetime withdrawal benefit (an LWB) if you want to purchase guaranteed retirement income at some point in the future,

You deposit your funds today with the intention of taking out income at some point 10 years or more in the future. The annuity company takes a snapshot of your account value each year as you go along. The new higher value is locked in as the new “income base” as the account value grows. You can use the larger of the current account value or the income base value to generate your guaranteed withdrawals when you activate your withdrawal rider.


The amount you can withdraw typically varies from 4% to 6% of the account value/income base value. The exact percentage depends upon your age at the time of withdrawal and the terms of your contract.

Using this option can be a good way to protect account values from the impact that a major market decline would have if you're 10 to 15 years away from retirement. This is particularly true if the decline should happen as you get nearer to your retirement age.

Work Toward Getting a Pension

It's great to retire with a pension. Some professionals spend the last 10 years of their careers working at a government agency just so they can acquire one. It's a smart move for those who didn't save enough toward retirement earlier in their careers. Look for employers that offer pensions and check to determine their vesting schedule. 


You might want to wait a bit longer if you're thinking about changing employers and if working the extra time means you'll have more guaranteed retirement income. These choices can help make your retirement more secure.

Some people worry that their pensions might not pay out all the benefits they were promised. The older you are when you start your pension, the more secure your income will be. There's a form of government insurance called the Pension Benefit Guarantee Corporation or PBGC.

It protects pension benefits, but the amount that's guaranteed has a cap. The insured amount is reduced for each year you retire before age 65. Begin benefits at 65 or later to maximize the insured amount if your pension is covered by the PBGC. 

Get a Reverse Mortgage

Guaranteed retirement income is just that: income that you can count on for life with no risk. A reverse mortgage can provide that level of security, and the income is tax free. So why don’t more people use them? Two reasons: fear and fees.

First, people fear that the bank can take their home. This was true long ago, but regulations have changed dramatically since 1985 or so. This product is now safer, stronger, and less risky for the borrower. 

Second, some people think that the fees are too high. Once again, regulations have improved this situation. Fees can no longer exceed limits set by the government. A reverse mortgage might be a viable option if you're age 62 or older, you're looking for guaranteed retirement income, and you've paid off your home or have plenty of equity in it.

Be Careful About When You Claim Social Security

Most retirees receive the largest portion of their guaranteed incomes from Social Security. Those receiving Social Security benefits get a cost-of-living adjustment each year, which usually results in an increase in benefits.

The problem is that most people still take Social Security too early, or they don't coordinate with their spouses if they're married. Hundreds of thousands of dollars of income that would be paid out in the form of spousal benefits and widow/widower benefits can be foregone because one spouse made an unwise decision about when to begin their benefits.


Try to avoid claiming Social Security at age 62. Starting benefits at a later age will often deliver a better outcome for you and more guaranteed income over your lifetime.

Put Money in a Deferred Income Annuity or QLAC

Longevity insurance is a form of a deferred immediate annuity that will guarantee you a minimum amount of income at a specific future age, such as 85 or 90.

There's a special form of this product called a QLAC or Qualified Longevity Annuity Contract. It's purchased inside an IRA or 401(k). The QLAC allows you to defer the start of your required minimum distributions.

People with longevity insurance feel more secure about spending their retirement money on fun and travel while they're younger because they know they have a future source of guaranteed income to provide for them later.

Build a Bond Ladder

Many retirees are afraid to spend principal, but it can be perfectly OK if it's structured the right way as part of a plan.

You can build a bond or a CD ladder. This involves buying a certificate of deposit or a bond that will mature in a specific year in an amount you'll need at that time to cover expenses. When the bond matures, you spend it.

Another option is to use Treasury securities. These are bonds issued by the U.S. government, and they're considered to be one of the safest investments you can own. Financial institutions can strip the interest portion of the bond from the principal portion, creating something called Treasury STRIPS. You can buy these strips with maturities that are laddered out, creating a guaranteed stream of income with each strip maturing in the year you'll need it. 

Frequently Asked Questions (FAQs)

What is a good monthly income in retirement?

The median average retirement income in the U.S. was $47,357 for those age 65 and older in 2021, according to Annuity.org. "Median" means that half of all retirees had more income than this, and half had less. Your income could therefore be considered "good" or at least better than half of all retirees in this age group if you had more than the median.

Can you live off an annuity?

Living off an annuity depends on the type or types of annuities you've chosen and when you've elected to receive the most significant payouts. It also depends heavily on your expenses in retirement. Create an anticipated budget, then factor in any other sources of retirement income you're planning on. Determine whether the annuity you've chosen or are considering will be sufficient to make up any shortfall.

Was this page helpful?
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. The Financial Industry Regulatory Authority, Inc. "Immediate Annuities: Money Now and for the Rest of Your Life ... for a Price."

  2. Pension Benefit Guaranty Corporation. "Maximum Monthly Guarantee Tables."

  3. Pension Benefit Guaranty Corporation. "Glossary, Early Retirement Age."

  4. Pension Benefit Guaranty Corporation. "General FAQs About PBGC."

  5. Consumer Financial Protection Bureau. "What Is a Reverse Mortgage?"

  6. Social Security Administration. "If You Are The Survivor."

  7. Social Security Administration. “Starting Your Retirement Benefits Early.”

  8. The Financial Industry Regulatory Authority, Inc. "Deferred Income Annuities: Plan Now for Payout Later."

  9. Annuity.org. "Average Retirement Income: Where Do You Stand?"

Related Articles