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How to Not Run Out of Money in Retirement

Worried about outliving your savings? Consider investing in a fixed annuity so you'll have guaranteed income for life. Here's how it works.


  • Step 1: Understand retirement planning Understand what you're working for; ensuring adequate lifetime income is a primary reason you save for retirement. The goal of saving for retirement isn't just to build wealth -- it's to replace the income you earned when you were working.
  • Step 2: Consider a fixed annuity Consider investing in a fixed annuity; it guarantees you a specific amount of retirement income so you can cover basic expenses when you stop working, and it won't run out no matter how long you live.
  • TIP: Unlike the stock market, real estate, or other potentially risky ventures, a fixed annuity is guaranteed by an insurance company, can't be lost, and provides a minimum of amount of interest.
  • Step 3: Consider a variable annuity If you want the potential for higher returns than a fixed annuity offers and are willing to assume some risk, consider a low-cost variable annuity. Payouts fluctuate because they're tied to how the markets perform.
  • TIP: Many annuities include the option to provide lifetime income to your spouse or other beneficiary after your death.
  • Step 4: Weigh the benefits Consider contributing to an annuity while you're still working, as opposed to purchasing one when you retire. A low-cost annuity can be a valuable part of a diversified retirement portfolio. It's a guaranteed asset that can help minimize volatility and improve overall returns over time.
  • Step 5: Have a customized plan Remember that one size doesn't fit all when it comes to retirement strategies. Discuss your needs and goals with an objective financial advisor, and then create a customized plan that has the right mix of investments for you.
  • FACT: The average monthly Social Security payment for retired workers as of July 2009 was $1,160, while the average monthly spending for individuals age 65 and older was $3,044.

You Will Need

  • Fixed annuity
  • Financial advisor

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