One of the most common patterns we see in retirement planning is that the people who saved the most are often the most afraid to spend. They did everything right during their working years—contributed to their 401(k)s and IRAs, avoided unnecessary debt, and built up substantial savings. But once retirement arrives, a new fear takes over:
“What if I run out of money?”
This fear is especially strong for people in their 60s and early 70s who may be healthy, active, and planning to live a long life. The irony is that many retirees are financially secure, yet emotionally hesitant to use their own money.
The Real Problem: Longevity Risk
The biggest financial risk in retirement isn’t usually a market crash—it’s living longer than expected. Most people underestimate how long retirement can last. It’s now very common for one spouse to live into their late 80s or 90s, and in some cases even beyond 100.
That means your savings may need to last 25 to 35 years or more.
When people realize this, they often respond by becoming overly conservative. They delay spending, reduce travel, and avoid big decisions—not because they can’t afford them, but because they’re afraid of future uncertainty.
Shifting From Saving to Income Planning
During your working years, financial success is measured by how much you accumulate. In retirement, success is measured by how reliably you can turn savings into income.
This is where income planning becomes essential.
In today’s Cardinal Lesson, Hans and Tom walk through one of the tools we use to help retirees create guaranteed lifetime income using certain types of annuities. The goal is not to replace investing, but to take a portion of your savings and convert it into a dependable monthly paycheck.
How Guaranteed Income Works
With the right annuity strategy, part of your retirement savings can be used to generate:
- A monthly income for life
- Payments that continue as long as you live (or as long as either spouse lives)
- Income that is not affected by the stock market
- Protection against outliving your money
In the video, Hans and Tom show examples for both a single person and a married couple, demonstrating how a specific amount of savings can be converted into $1,000 per month for life, starting either immediately or at a future date.
This effectively shifts the longevity risk from you to the insurance company.
Why This Changes Behavior
Once retirees know that a portion of their income is guaranteed, something powerful happens—they start to feel safe spending their money.
Instead of constantly checking account balances and worrying about market downturns, they can focus on:
- Enjoying travel and hobbies
- Helping family or grandchildren
- Making lifestyle choices with confidence
It often creates a psychological shift from “preserve at all costs” to “live with purpose.”
Not a One-Size-Fits-All Solution
These strategies are not right for everyone. Some retirees already have enough guaranteed income from:
- Social Security
- Pensions
- Rental income
Others may need more flexibility or growth potential.
That’s why we never recommend putting all of someone’s money into annuities. Instead, we look at how they fit into the larger financial plan, alongside:
- Investment portfolios
- Tax planning
- Roth conversions
- Long-term care strategies
- Estate planning goals
The Bigger Picture
At Cardinal Advisors, we view guaranteed income as one tool among many. But for the right person—especially someone who is anxious about spending or worried about outliving their savings—it can be one of the most impactful tools in retirement planning.
The ultimate goal isn’t just to avoid running out of money.
It’s to help you use your money confidently, so you can enjoy the retirement you worked so hard to build.
