For many retirees today, one of the biggest worries is not running out of money. You’ve saved, you’ve planned, and now you’re staring at a retirement that could last 25–30 years. But there’s no pension coming in every month like your parents may have had.
So what do you do?
At Cardinal Advisors, we help people answer that question every day. And in today’s lesson, we’re talking about a practical solution: using part of your savings to buy your own income—your own personal pension.
Let’s walk through how it works, why it matters, and how it fits into a well-rounded retirement plan.
The Problem: You Have the Money, But Not the Income
Most of our clients today are retiring without a pension. Instead, they have a 401(k), an IRA, or other investments. These savings are great, but they don’t come with a built-in paycheck. That’s where the uncertainty begins.
Many people ask:
- How much can I safely spend?
- What if the market crashes?
- What happens if I live to 90—or longer?
- How can I make sure my spouse is taken care of after I’m gone?
It’s one thing to accumulate savings. It’s another to convert those savings into a steady, worry-free retirement income. That’s what today’s lesson is all about.
The Solution: Buy an Income Using Two Annuities
In the video, we walk through a real example: a couple, both age 65, wants to create $2,000/month of guaranteed income for the rest of both of their lives. They have the savings, but no pension.
Our solution? They use two annuities to build their own monthly paycheck that:
- Starts right away
- Lasts as long as either of them is alive
- Doesn’t depend on the stock market
- Still leaves money behind for heirs
Here’s how it works.
Step 1: Immediate Income with a SPIA
The first annuity is a SPIA—a Single Premium Immediate Annuity. They put $109,000 into this, and it starts paying them $2,000/month for 5 years. That gives them immediate cash flow while the second annuity gets time to grow.
Even if both spouses pass away during those first five years, the payments continue to their heirs. There’s no risk of losing that money.
Step 2: Deferred Income with a Fixed Indexed Annuity
The second annuity is a Deferred Income Annuity. They put $222,000 into this policy, and it sits there for 5 years. After that, it kicks in and continues paying $2,000/month—for life.
If one spouse dies early, the payments continue for the surviving spouse. And when the second spouse passes away, the remaining cash value goes to their heirs.
Bonus: This annuity also includes a long-term care enhancement. If either spouse needs care and qualifies based on Activities of Daily Living (ADLs), their $2,000/month could temporarily increase to $4,000/month for up to 5 years.
Why Two Annuities Instead of One?
People often ask, “Why two? Why not just buy one annuity?”
Great question.
We’ve run the numbers both ways. If this couple had used all $331,000 to buy just a SPIA, they’d get $1,834/month for life. If they had put it all into a deferred annuity, they’d get $1,684/month for life.
By combining the two policies, they get a higher monthly income: $2,000/month. That’s more money over time—and with better flexibility and protection for heirs.
So yes, it’s a little more complex up front. But it pays off in the long run.
What If You’re Single?
Good news—if you’re a single retiree, this strategy still works. In fact, it usually costs less to buy the same monthly income because the insurance company is only covering one life instead of two.
We can run customized numbers for single individuals just as easily. You don’t have to be part of a couple to benefit from guaranteed income planning.
What If You’re Not 65 Yet?
If you’re younger—say, 60 and planning to retire at 65—you might only need to buy the deferred annuity now and let it grow. That allows your money to benefit from additional compounding and gives you higher monthly income later.
We help many people in their late 50s and early 60s get started early so they can lock in higher future income with less investment.
What Happens to the Money If You Die Early?
This is one of the most common concerns we hear:
“What happens to my money if I die before I get all of it back?”
With the SPIA, payments continue to your beneficiaries for the full five years, no matter what. With the deferred annuity, the remaining cash value goes to your heirs—not the insurance company.
This is not about losing your money—it’s about using it to create predictable income while still having a legacy plan.
The Bigger Picture: Planning with Purpose
This strategy doesn’t exist in a vacuum. At Cardinal Advisors, we build plans that include:
- Social Security timing
- Medicare decisions
- IRA withdrawal strategies
- Estate planning
- Long-term care
- Tax-efficient distributions
Buying an income is one piece of the puzzle—but for many retirees, it’s a crucial one. It brings clarity, comfort, and freedom to enjoy retirement instead of fearing it.
Is This Right for You?
This strategy won’t be right for everyone.
If you already have enough guaranteed income—or if your retirement plan is already working well—you might not need to do anything.
But if you’ve saved well and are still wondering how to turn that into something you can spend, this could be one of the most important financial decisions you make.
We’ve helped clients—from middle-class retirees to multi-millionaires—use this approach to cover their essential needs and gain peace of mind.
