Today, what I want to talk about are the four biggest risks that people face in retirement. But before I talk about that, I want to have you imagine a scenario.

Think about this. For 30 or 40 years, as you’re accumulating your wealth, preparing for retirement, there are two very important things that are going on.

First, is that every week or every other week or every month, you are getting a predictable paycheck in your bank account that you can create your entire lifestyle and budget around.

Now, the second thing is, is that if you’re saving properly for retirement, you’re taking part of that income and you’re putting it into your 401k or your retirement accounts in order to save and accumulate for retirement.

And that money that you’re allocating towards your retirement is money that you’re never touching, that it’s a cardinal sin to touch that money while you’re trying to save for retirement.

Then, suddenly, something happens. You decide to retire.

And the day you retire, two very important things happen.

First, are the paychecks from work are gone. You’re no longer receiving that. And the second thing is the nest egg that you’ve purposely never touched for the last 30, 40 years for your retirement. Starting now, you are beginning to take monthly distributions.

This is a completely different mental shift that people have to make, first in preparing for retirement, and then when they enter into retirement.

Studies have shown that people who are retired have more happiness when they have a predictable amount of guaranteed income coming into their bank account every single month.

So, the question I have to you is where do you get a predictable, guaranteed amount of income?

Three sources of guaranteed income

I would like to say that there are really only three places that you can get a guaranteed income from, and all of them are some form of an annuity.

Social Security

The first place that people get an annuity in retirement is from Social Security.

Every single person that contributes to Social Security can get a benefit out in retirement. And for some people, it’s a substantial amount of income, for some people, less.

But it’s an annuity. It’s an annuity payment for a few different reasons:

  • It’s a guaranteed income that you can never outlive. No matter how long you live, you’re going to get it.
  • It will increase over time. So, with inflation, when inflation goes up, your income payment goes up.
  • The longer that you choose to defer that payment, the greater the payment will be when you actually turn it on.

These are the three basic key components of what an annuity is.

And so, whether you like it or not, Social Security is an annuity payment that’s paid to you by the government.


Well, what’s the other place that people get guaranteed income from? The other place is from a pension.

Now, back in the old days, pensions were paid from corporations. And you don’t see that too much anymore, but pensions generally now are paid from cities, state, and governments.

Everybody knows a teacher, a firefighter, or somebody who receives an amount of income every single month predictably from their pension.

Why is a pension an annuity?

  • It?s an income payment that the person can never outlive.
  • Every year that income payment is going to increase with inflation.
  • The longer they choose to defer that income payment, the greater their benefit’s going to be.

Again, a pension is an annuity payment.

Now, I said that people’s happiness is directly tied to the amount of guaranteed income. Those same teachers and firefighters that we all know that are receiving a substantial amount of their income from these guaranteed sources, those are exactly the happy people that we know of in retirement.

So, if you have Social Security that’s not enough for retirement and you don’t have access to a pension, where else are you going to buy or going to be able to secure a guaranteed income that you’re never going to be able to outlive?


The only place that you can buy that from is an annuity from an insurance company.

And it has to be an annuity that’s going to:

  • Give you an income payment that you can’t outlive.
  • Increase over time for inflation.
  • Allow you to choose to defer the payment longer, which will give you a greater amount of income payment.

The reason why people are happy in retirement when they have guaranteed income is because they don’t have to worry about the four major risks that people face during retirement.

And annuities address all of these risks perfectly.

Four retirement income risks

(1) Longevity Risk

The number one risk that people face in retirement is actually longevity risk. It’s not market risk. It’s longevity risk.

If you are a male, 65 years old. Your life expectancy is right around age 85. A woman who is 65. Her life expectancy is about age 87.

A married couple, man and woman, who’s 65 years old, their combined life expectancy says that at least one of them will live to age 92.

That means that there are people that are actually going to live longer than age 92.

So, imagine this. Imagine today that suddenly you became unemployed for 27 years.

What would that feel like?

That is exactly what happens to a married couple, aged 65, who retire.

They’re unemployed for 27 more years. And this creates a huge financial burden upon the people.

No amount of market return is going to overcome somebody living to age 92, 95, or beyond.

An annuity is the only place that you can get a guaranteed income payment that you’re guaranteed never to outlive.

(2) Market Risk

The second biggest risk that people face is market risk. And studies have also shown conclusively that a person’s retirement success is very, very dependent on how their retirement portfolio performs three years prior to retirement or their first three years in retirement.

And if a person has a substantial amount of their money at risk in the market and they experience a significant loss in those first three, or prior to, or in retirement, their chances of a successful retirement are drastically reduced.

(3) Inflation Risk

The third place that people face in risk is inflation risk. Let’s say I’m having $50,000 a year coming in every year that’s not increasing, that $50,000 will buy me $50,000 worth of stuff in retirement today.

But at some point in the future, I’m only going to be able to buy $40,000 worth of stuff.

And again, if you’re farther out into the future, I’m only going to be able to buy $30,000 worth of things. Your income payment needs to be tied to something that’s going to increase with inflation over time.

(4) Sequence of Returns Risk

The fourth place that people find risk in retirement is called “Sequence of Returns Risk.” The way that this works is that while you’re accumulating your assets over 30 or 40 years that you’re saving it for retirement, most people only measure their average return over a period of time due to market volatility.

So if your financial planner says that you average a 8% return on your money over the last 30 to 40 years, you can look back and say that you did well.

Were averaging falls apart is the last 3 to 5 years before retirement and the 3 to 5 years when you start taking monthly distributions. If the market is down during those periods your retirement dollars are going to be much less and the amount of money that you have in retirement may not make it to the end of your life.

If on the other hand if the stock market is doing well during those last remaining years before you retire and the early years of your retirement you might have great success with your portfolio. If you google ?Sequence of Returns? you will see various security companies showing you their studies on this subject.

Market volatility and your continued monthly distributions is the factors in a down stock market that affect the Sequence of Returns of your portfolio. Annuities can be a partial benefit to you to lessen these negative effects occurring to your retirement.

Eliminating the Sequence of Returns Risk is a huge part about how to have a happy retirement.

The reason why people and studies have shown that people have a happier retirement when they have an annuitized income or have a substantial amount of their income coming from these three places, is because those retirees do not have to worry about these four risks.

They can go have a happy retirement and do the things that they want to do without worrying about the things that bother everybody else during retirement.

Request a personalized ‘Your Retirement Income Report’

Also, you have an opportunity to have your own report ran for you by me called “Your Retirement Income Report.”

In this income report, you’ll find a number of things which includes how an annuity can address these four specific retirement income risks with your specific situation.

With this type of report, you can feel comfortable knowing that when you go into retirement, that you can have the happiest retirement possible. You can reach me by calling 888-839-3536 or e-mail me at Thank you for reviewing this information.