Most retirees don’t lie awake at night worrying about whether they’ll beat the S&P 500 this year.
They worry about whether they’ll have enough income to live comfortably, no matter what happens in the market.
That’s where the idea of insuring part of your retirement paycheck comes in. You don’t need every dollar guaranteed — just enough to sleep well.
🧩 Two Kinds of Income
In retirement, income generally falls into two buckets:
- Guaranteed Income — predictable checks you can count on, month after month.
Examples: Social Security, pensions, or annuity payments. - Non-Guaranteed Income — money you draw from investments.
It offers flexibility and growth potential, but it fluctuates with the market.
Both are valuable. The trick is finding your personal balance between certainty and control.
⚖️ A Comfortable Ratio
For most retirees, Social Security alone replaces about 30–40% of pre-retirement income.
If you’re lucky enough to have a pension, that might bring your guaranteed income up to 50–70% of what you’ll need.
Everyone else? You can consider adding a private income guarantee — such as an annuity — to reach your own comfort threshold.
A simple rule of thumb:
If your emotional tolerance for short-term market fluctuations could be described as anxiety-prone: aim to cover 60–80% of your essential expenses (the “keep-the-lights-on” stuff) with guaranteed income sources.
That way, your portfolio can focus on the long game — growth and inflation protection — instead of being your only source of groceries and sanity.
💬 The Trade-Offs (Because There’s Always a Catch)
Benefit | Trade-Off |
Stable, reliable income for life | Reduced liquidity or flexibility |
Less stress about market declines | Lower long-term return potential |
Easier to stay invested for growth | Often an irrevocable decision |
Guaranteeing more income means tying up some money — but for some people, that trade-off feels well worth it once the next market dip arrives.
How do the rest of the folks handle these dips when they decide they want to stay liquid and avoid the fine print of guaranteed income?
They stay flexible with their expenses and mindful of withdrawals.
🌱 The Behavioral Bonus
When retirees know their core needs are covered, they tend to relax about the rest of their investments.
That calm translates into better investing behavior — less panic selling, fewer rash moves, and more time for living.
So if your retirement plan makes you nervous every time the market drops, it might not be your investments that need adjusting — it might be your income mix.
🧭 Bottom Line
I believe in the power of financial planning to make sure your short-term needs are covered so that you never have to sell your long-term investments at a bad time.
You don’t need your entire retirement “insured,” but you do need enough certainty to enjoy the journey.
The right blend of guaranteed and growth income turns “I hope this works” into “I know I’ll be okay.”
Let me know if you’re interested in considering more guaranteed income next time we update your plan!
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Western Wealth Management LLC , a registered investment advisor. Western Wealth Management LLC and Kennebec Wealth Management LLC are separate entities from LPL Financial.