By Brent Matthew
Having multiple income streams is a hallmark of a strong retirement plan. But if those different streams of income aren’t coordinated, you might run into problems down the line. Retirement income planning with annuities, Social Security, and investments can be a tricky symphony to conduct, and finding that rhythm is essential.
If you’re feeling income-rich but tax-confused or concerned about market volatility, it’s time to consider moving from a collection of investments to a holistic income ecosystem. Many retirees have distinct “pockets” of money, such as Social Security, an investment portfolio, and an annuity. In this guide, we walk through the basics of getting them in sync.
Social Security: Your Foundation, Not Your Entire Floor
When you’re retirement income planning with annuities, investments, and Social Security, you need to understand how each fits into your larger plan. Your Social Security benefits can offer you an income “floor” in retirement, but for many of my clients, Social Security only covers around 30% to 40% of their needs.
Determining when to start claiming Social Security is critical. If you claim it at the wrong time (which is what usually happens if you claim it without looking at your other assets), you could end up leaving money on the table.
If you’re able to wait longer to start claiming Social Security, your benefit should be higher. However, before making any decisions on retirement income planning with annuities and Social Security, wait to see what your other retirement “paychecks” look like.
The Investment Portfolio: The Growth Engine
Social Security benefits are adjusted each year to keep up with inflation, but if you want a rewarding, comfortable retirement, you need to plan for long-term growth. This is where your stocks and bonds become important.
Many people assume that their portfolio’s growth over time should be enough to guarantee a well-funded retirement, but that’s not always the case. If you want your retirement’s growth engine to perform optimally, you need to leave it untouched.
The sequence-of-returns risk is a very real danger. Imagine that the market suddenly drops by 20% early in your retirement, and you have to liquidate part of your portfolio just to pay your mortgage. If that happens, your portfolio may not recover.
The Annuity: The “Conductor” of the Orchestra
Retirement income planning involves a lot of coordination and your annuity might actually help you organize your retirement plan.
First, avoid thinking about your annuity as an investment. It’s better described as income insurance. When you have the sense of stability that comes with income insurance, you can have an easier time using your other forms of retirement as they were intended.
Here’s a look at how this works:
With Social Security
Your annuity can act as a “bridge” from early retirement to Social Security. Because you would have income from the annuity, you could delay Social Security and collect the maximum benefit.
With Investments
The payout from your annuity can be used to cover food, utilities, and other essential expenses. Because you wouldn’t need to use your investment portfolio to fund your everyday life, you could let it grow through market cycles without liquidation. Your investments could then cover both your “wants” and your legacy.
Streamlining Retirement Income Planning
Retirement income planning with annuities, investments, and Social Security isn’t about the size of accounts; instead, the reliability of cash flow is key.
Scottsdale Wealth Advisory is here to help you put the strength of your retirement plan as a whole to a “stress test.” Our goal is to enhance your quality of life both now and in the future. As fiduciaries, we hold ourselves to a higher standard and put integrity first.
Contact us online to learn more about our firm and how we work. To schedule your complimentary financial coaching session, call (480) 247-9090, email info@SWAFirm.com, or book directly at calendly.com/BrentMatthew.
Frequently Asked Questions
How do annuities fit into retirement income planning?
Annuities can help create predictable income by turning a portion of your savings into guaranteed monthly payments. They often work alongside Social Security and investment accounts to help cover essential expenses like housing, utilities, and healthcare, reducing the pressure to withdraw from your portfolio during market downturns.
Should I delay Social Security if I have an annuity?
In some cases, yes. An annuity can provide income early in retirement, which may allow you to delay claiming Social Security and increase your future monthly benefit. If you’re looking for help evaluating how annuities and Social Security can work together so you can make more confident claiming decisions based on your full retirement income picture, reach out to the Scottsdale Wealth Advisory team.
Can annuities help protect my investment portfolio during market volatility?
Yes. One of the biggest benefits of annuities is reducing sequence-of-returns risk. If your annuity and Social Security cover your core living expenses, you may be less likely to sell investments during a market decline. Scottsdale Wealth Advisory helps retirees structure income strategies that balance guaranteed income with long-term portfolio growth and flexibility.
About Brent
Brent Matthew is the founder and CEO of Scottsdale Wealth Advisory, a full-service fiduciary retirement planning firm serving pre-retirees and retirees across Arizona and multiple states. With a strong commitment to always putting clients first, Brent leads the firm in developing comprehensive, tax-efficient financial plans tailored to each family’s unique goals.
Advisory services are offered by Scottsdale Wealth Advisory, LLC, an Investment Advisor in the State of Arizona. Insurance products and services are offered through Scottsdale Wealth Advisory, LLC. Scottsdale Wealth Advisory, LLC is not affiliated with or endorsed by the Social Security Administration or any government agency, and is not engaged in the practice of law. Be sure to consult with a licensed financial professional to confirm the accuracy of the insurance product you are considering.
