How to Build Guaranteed Retirement Income After Your Pension Disappears

Nearly 50% of households nearing retirement may not be able to maintain their standard of living by 2025, mainly because traditional pensions have disappeared. More than half of all US retirement assets are now in self-directed plans like 401(k)s and IRAs. This change means we can no longer rely on employer-guaranteed income for life. Our generation stands at a unique position regarding retirement planning in Fresno CA available with wealth building.

Understanding Why Pensions Disappeared and What It Means for Your Retirement

The transformation from pensions to 401(k)s began in the 1980s when companies started moving away from defined benefit plans. By 2022, only 15% of private industry workers had access to pensions, down from approximately 50% in the mid-1980s. Conversely, 69% of private sector workers now have access to defined contribution plans.

Companies made this move due to economic strain. Pensions required employers to fund predetermined retirement benefits for life and created unpredictable costs as people lived longer. The administrative complexity and high management expenses became unsustainable. Major corporations like General Electric and IBM froze their pension plans, with GE wanting to reduce its underfunded pension deficit by as much as $8 billion.

Your Main Options for Creating Guaranteed Retirement Income

Fortunately, several proven methods exist to replace pension-like income streams. Each option provides different levels of guarantees and growth potential.

Annuities represent the closest modern equivalent to traditional pensions. Fixed annuities guarantee a specific interest rate on your investment. Some products provide rates above 6.30% for five-year terms. Fixed indexed annuities link returns to market indices and protect your principal from losses through a zero-return floor. Variable annuities provide market participation through mutual fund-like subaccounts, though account values fluctuate with market performance.

How to Build Your Personal Guaranteed Income Plan Step-by-Step

Start by calculating your monthly retirement expenses. Separate them into essential costs (housing, healthcare, utilities and food) and discretionary spending (travel, entertainment and hobbies). Next, list your guaranteed income sources. Add up Social Security benefits, any remaining pension income and other reliable monthly cash flows. Subtract this total from your essential expenses to identify your income gap.

This gap represents the amount you need to cover through additional guaranteed sources. Match your essential expenses to guaranteed income first. Annuities become especially valuable for filling that shortfall if Social Security and pensions don’t cover necessities.

Conclusion

We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to see how we can help you Retire ”Your Way!”

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Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser. This commentary reflects the personal opinions, viewpoints and analyses of the author, Dale Soutas. It does not necessarily reflect the views of Foundations Investment Advisors, LLC (“Foundations”) and is provided for educational purposes only and the contents are solely maintained by and the responsibility of the applicable 3rd party . The 3rd party content is subject to change at any time without notice, and does not represent an express or implied opinion or endorsement of any specific investment opportunity, investment strategy or planning strategy. Foundations in no way deems reliable any statistical data or information obtained from or prepared by third party sources in this commentary, nor does Foundations guarantee its accuracy or completeness. No legal or tax advice is provided or intended.

A Qualified Charitable Distribution (“QCD”) is a direct transfer of funds from your IRA custodian, payable to a qualified charity. QCDs can be counted toward satisfying your required minimum distributions (“RMDs”) for the year, as long as certain rules are met. Some charities may not qualify for QCDs. First consult your tax advisor or the charity for its applicability. Tax loss harvesting is a strategy that may help minimize the amount of current taxes you have to pay on your investments by choosing to sell an investment at a loss. It is only appropriate for certain taxpayers in certain scenarios. Please review your retirement savings, tax and legacy planning strategies with your legal/tax advisor before attempting a tax loss harvesting strategy.

Any comments regarding safe and secure investments and/or guaranteed income streams refer only to fixed insurance products overseen by state insurance regulators and not any investment advisory products. Rates and guarantees provided by insurance products and annuities are subject to the financial strength of the issuing insurance company; not guaranteed by any bank or the FDIC.

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