7 Ways to Get Guaranteed Retirement Income

Buy an Immediate Annuity

Immediate annuities are one way to get guaranteed income.
Immediate annuities are one way to get guaranteed income. John Lund

What’s the easiest way to get guaranteed income? You buy it. This is 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 life, or joint lives if married. For aspiring centenarians, this purchase could be the deal of a lifetime! There is no way to outlive your income with an immediate annuity.

Like the name implies "immediate" means the income starts right away. This means the best time to look at this option is when you are ready to retire and need an income that will start right away. The amount of monthly income you can get depends on your age. The older you are, the higher the amount of monthly income per dollar that you invest.

Use a Withdrawal Benefit Rider on a Deferred Annuity

Variable annuities provide guaranteed income for future use.
Variable annuities provide guaranteed income for future use. carlp778

If you want to purchase guaranteed income at a point in the future, look for an annuity that has a guaranteed minimum withdrawal benefit rider (GMWB), or lifetime withdrawal benefit (LWB).

How does such a feature work? You deposit your funds today, with the intention of taking out income at some point ten years or more in the future. As you go along, the annuity company takes a snapshot of your account value each year; as the account value grows the new higher value is locked in as the new “income base”. At such time as you activate your withdrawal rider you can use the larger of the current account value, or the income base value, to generate your guaranteed withdrawal. The amount you can withdraw typically varies from 4-6% of the account value/income base value, with the exact percentage being dependent on your age at the time of withdrawal and the terms of your contract.

If you are ten to fifteen years away from retirement, using this option can be a good way to protect account values from the impact that a major market decline would have on you if it should happen as you get near your retirement age.

Work Toward Getting a Pension

Pension plans can be a source of guaranteed income. Kirby Hamilton

It's great to retire with a pension. I've watched some professionals spend the last ten years of their career working at a government agency just so that they could get a pension. This is a smart move for those who didn't save enough earlier in their careers.

When you look for employers, find ones that offer a pension, and check to see what the vesting schedule is - meaning how long do you have to work there to qualify for the pension. If you're thinking about changing employers, maybe you want to wait a bit longer if the extra time means you would get more guaranteed income. These choices can help make your retirement more secure.

Some people are worried that their pension may not pay out all of the benefits that were promised. The older you are when you start your pension, the more secure your income will be. There is a form of government insurance, called the Pension Benefit Guarantee Corporation (PBGC), that protects pension benefits, but the amount that is guaranteed has a cap, and for each year you retire prior to age 65, the insured amount is reduced. If your pension is covered by the PBGC, to maximize the insured amount, begin benefits at 65 or later.

Get a Reverse Mortgage

A reverse mortgage may be a good option for retirement income. DebbiSmirnoff

Guaranteed income is just that; income guaranteed for life with no risk on your part. 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 in the last thirty years, making this product safer, stronger, and less risky for the borrower. The concern about losing your home is not a rational fear any longer. Reverse mortgages are a safe option.

Second, some people think fees are too high. Once again, regulations have improved this situation, and fees today cannot exceed government specified limits. If you're age 62 or older, and looking for ​guaranteed income, a reverse mortgage is a viable option.

Be Thoughtful About When You Claim Social Security

Social Security benefits are designed to provide guaranteed income. Donald Higgs

The majority of retirees receive the largest portion of their guaranteed income from Social Security. Not only is the income guaranteed, but each year those receiving Social Security benefits are given a cost-of-living adjustment, which in most years will result in an increase in benefits.


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

Don't be foolish and rush to claim Social Security at 62. Once you understand the odds, you can see that starting benefits at a later age will often deliver a better outcome for you - and more guaranteed income over your life.

Put Money in a Deferred Income Annuity or QLAC

Longevity insurance will provide you with income at a later date. Dimitri Otis

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 income that begins at age 85 or 90. When purchased inside of an IRA or 401(k) there is a special form of this product called a QLAC, or Qualified Longevity Annuity Contract that is used. The QLAC allows you to defer the start of your required minimum distributions.

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

Build a Bond Ladder

A laddered bond portfolio will provide you with income when you need it. Stephen Simpson

M​any retirees are afraid to spend principal, but when it is structured the right way, as part of a plan, it is perfectly okay. For example, you can build a bond or CD ladder, where you buy a CD or bond that will mature in a specific year, in an amount needed to cover expenses that year. When the bond matures, you spend it.

Another option is to use Treasury securities, which are considered to be one of the safest investments you can own. They are a bond issued by the U.S. Government. Financial institutions can strip the interest portion of the bond from the principal portion, creating something called a Treasury Strip. 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 will need the income.