A strong retirement plan not only helps clients’ grow their portfolio but should also help clients answer one of the hardest questions in retirement: “How much can I withdraw?” Annuities can provide a solution by creating a source of income designed to be predictable, sustainable, and not tied to day-to-day market movement.
Key Takeaways
- Clients often need a different kind of planning conversation as they enter retirement. The focus moves from building assets to converting those assets into income.
- More than 4.1 million Americans are turning 65 each year through 2027, increasing the need for retirement income strategies that address longevity and spending confidence.¹
- Research suggests retirees often withdraw cautiously from savings, even when a higher withdrawal amount may be sustainable.²
- Annuities can help create a “license to spend” by turning a portion of retirement assets into income clients may feel more comfortable using.²
Why does retirement require a different planning conversation?
Before retirement, the planning conversation often centers on portfolio growth. Clients are working toward a future goal, building assets over time, and measuring progress against a retirement number.
Once clients are on the Retirement Runway — the five years before and after retirement — the focus changes.
Clients still care about portfolio value, but they also need to know they won’t outlive their assets. The question becomes less about reaching a savings target and more about creating a sustainable income strategy.
That shift is especially important now. More than 4.1 million Americans are turning 65 each year through 2027, or more than 11,200 people every day.¹ For financial professionals, this creates a clear opportunity to help clients move from a savings mindset to an income mindset.
Why does withdrawing from savings feel so difficult?
Withdrawing from retirement savings can feel uncomfortable because it asks clients to reverse decades of financial behavior.
For most of their working lives, clients are encouraged to save more, spend carefully, and protect what they have built. In retirement, they may be financially ready to spend from those assets, but emotionally hesitant to do so.
The challenge isn’t purely logical. It’s behavioral.
Clients may understand the logic of a withdrawal strategy and still feel uneasy watching an account balance decline. That discomfort can lead to underspending, even when a plan suggests they may be able to withdraw more.
Research from David Blanchett and Michael Finke found that many retirees spend less from savings than traditional retirement models would suggest. In one analysis, withdrawal rates from savings were approximately 2.1% for 65-year-old married households and 1.9% for single households.²
How can annuities help create a “license to spend”?
Annuities can help clients see part of their retirement assets differently.
Instead of viewing every dollar as principal that must be preserved, clients may be able to use income payments from an annuity as a more structured income source within their broader retirement plan. That can help make spending feel less like drawing down savings and more like receiving income for retirement needs.
Blanchett and Finke’s research found that retirees tend to spend more from wealth held in the form of lifetime income than from non-annuitized investment assets.
Their research also found that approximately 80% of lifetime income is spent by retirees, compared with about half of wages and capital income.2
That finding helps explain the idea of a “license to spend.” When income feels dependable, clients may feel more comfortable using it to support the retirement they planned for.
Why does retirement income certainty matter?
Market volatility, inflation, healthcare expenses, and longevity can all affect how confident clients feel about withdrawing income. Sequence-of-returns risk can also make early retirement losses more concerning, especially when withdrawals are happening at the same time.
A portfolio may still be an important part of the plan. But for many clients, relying only on portfolio withdrawals can create uncertainty around how much they can safely withdraw and for how long.
Annuities may help address that concern by creating a source of income designed to continue according to the terms of the contract. Used as part of a broader strategy, they can help clients protect their income needs from market volatility.
What does this mean for financial professionals?
Financial professionals can help clients make the transition from asset accumulation to income generation.
That starts with helping clients understand the difference between having enough saved and feeling confident enough to withdraw from those savings. It also means identifying where guaranteed* income may fit, how much income is needed, and what trade-offs should be considered.
Annuities, including fixed indexed annuities, like WealthChoice FIA, may play a role for clients who want growth potential, protection from direct market loss, and income features designed to support retirement planning needs. The right strategy will depend on each client’s goals, risk tolerance, income sources, liquidity needs, and retirement timeline.
For financial professionals, this is not just a product conversation. It is a planning conversation that helps clients connect their accumulated savings to the income they need for the years ahead.
In Conclusion: Retirement planning should help clients feel ready to withdraw.
A successful retirement strategy is not only about helping clients reach retirement with a certain amount in assets. It is about helping them use those assets in a way that supports their income needs and retirement goals.
For many clients, the transition from saving to withdrawing can be harder than expected. A reliable income strategy can help them feel more confident in retirement.
As more Americans enter retirement, financial professionals who can guide this conversation will be positioned to deliver something clients deeply value: greater retirement income certainty.
Ready to take the next step?
For clients who are wondering how long their accumulated assets may last, share Making Your Retirement Savings Last. It offers a practical way to think about income needs, spending confidence, and the role a reliable income strategy can play in retirement.
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*Guarantees are backed by the claims-paying ability of the issuing insurance company. Fixed indexed annuities are not direct investments in the market and may be subject to caps, participation rates, spreads, fees, surrender charges, and other limitations.