What is the primary goal of a retirement income floor?

The primary goal of a retirement income floor is to ensure that all of a retiree's essential living expenses are covered by guaranteed, predictable income streams, providing financial security and peace of mind regardless of market performance.

How much guaranteed income do I need for my income floor?

You need enough guaranteed income to cover 100% of your essential living expenses in retirement. This includes costs like housing, utilities, food, basic healthcare, and transportation.

What are the main sources of guaranteed income for a retirement income floor?

The main sources include Social Security benefits, defined-benefit pension plans, and certain types of annuities, such as Single Premium Immediate Annuities (SPIAs) or Deferred Income Annuities (DIAs).

Can I build an income floor if I don't have a pension?

Yes, absolutely. Many retirees build their income floor primarily using Social Security benefits and by strategically converting a portion of their savings into annuities or bond ladders to cover any remaining essential expenses.

Does an income floor strategy mean I can't invest in the stock market?

No, it doesn't. An income floor strategy focuses on covering essential expenses with guaranteed income. Any remaining savings beyond what's needed for the floor can still be invested in the stock market or other growth-oriented assets to cover discretionary spending or to leave a legacy.

How does inflation affect my retirement income floor?

Inflation can erode the purchasing power of fixed income streams. While Social Security benefits have a Cost-of-Living Adjustment (COLA), other guaranteed sources like some annuities may not. It's important to plan for inflation by considering inflation-adjusted annuities or allocating a portion of assets to inflation-hedging investments like TIPS.

Is an income floor strategy suitable for everyone?

The income floor strategy is highly beneficial for most retirees, especially those who prioritize security and predictability for their essential needs. It's particularly useful for those concerned about market volatility or outliving their savings. However, the specific components and size of the floor will vary based on individual circumstances and preferences.

Retirement Income Floor: Guide to Guaranteed Income | One…