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Debunking Retirement Income Planning Myths: Lifetime Income vs. Market Investments

Writer's picture: Morris & Pursley Financial PlansMorris & Pursley Financial Plans

Retirement should be a time for relaxation and enjoyment, not worry over financial uncertainty. As you start planning for retirement, you’ve probably heard conflicting advice—some from “market experts” and others promoting lifetime income solutions like annuities. It can be confusing to decide which route is right for you. Today, let's shed some light on the benefits of lifetime income and debunk some common myths about market investments versus annuities.

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Retirement Income Planning Myth 1: Market Investments Are Always the Best Option

One of the most common myths in retirement planning is that staying heavily invested in the stock market is the only way to ensure a comfortable retirement. While it's true that market investments can offer growth, they also come with risk—especially when you begin withdrawing from those accounts. This is known as sequence of returns risk.


Sequence of returns risk can dramatically affect your portfolio. For instance, if there is a significant market downturn in the first few years of retirement, it may be difficult for your investments to recover—potentially leaving you with less income later on. A well-balanced approach to lifetime income, which includes guaranteed income streams like annuities, can help shield your finances from these market ups and downs.

For a more in-depth look at sequence of returns risk, check out this Kiplinger article.


Retirement Income Planning Myth 2: Annuities Are Too Expensive and Not Worth It

Another common myth is that annuities are too costly and that the fees make them not worth considering. The reality is that the cost of an annuity often reflects the benefits you receive: guaranteed lifetime income and protection against outliving your savings. While there are fees associated with annuities, it's important to compare those costs to the potential financial insecurity that comes from relying solely on the market.

Additionally, there are various types of annuities, and not all of them carry high fees. Fixed annuities, for example, can offer straightforward options with fewer complexities compared to variable annuities. The key is to work with a knowledgeable advisor who can help you find the best solution for your situation.


Retirement Income Planning Myth 3: Annuities Are Only for Older Retirees

Many people think that annuities are only for older retirees, but they can actually be useful for a wide age range depending on retirement goals. Annuities provide a way to create guaranteed income streams, making them suitable for individuals looking to secure a portion of their income during the early, mid, or late stages of retirement. By purchasing an annuity earlier, you may also lock in higher payouts.


Tom Hegna, a noted economist and retirement income expert, has often mentioned that annuities serve as a foundation for income planning at different life stages. By incorporating annuities earlier in retirement, retirees can confidently enjoy their other investments knowing their essential expenses are covered.


The Benefits of Lifetime Income: Guaranteed Peace of Mind

Unlike market-based investments, lifetime income solutions like annuities provide guaranteed income for life. Annuities aren’t impacted by the day-to-day fluctuations of the market, offering the kind of stability that’s especially crucial in retirement. Here are a few key benefits:

  • Predictable Income: With a lifetime annuity, you’ll know exactly how much income you’re going to receive every month, regardless of what’s happening in the market.

  • No Fear of Outliving Your Savings: Many retirees worry about outliving their savings, particularly as life expectancies increase. Annuities provide income for as long as you live, removing this concern.

  • Stable, Reliable Strategy: Annuities provide the peace of mind that comes from knowing your financial basics are covered, so you can enjoy life without constant stress over market volatility.


Why It’s Not About Choosing Between Investments and Annuities

One of the biggest misconceptions is that you have to choose between market investments and lifetime income. In reality, an effective retirement plan often includes a combination of both. Market investments can offer growth and potential wealth accumulation, while guaranteed income sources like annuities provide stability and protect against risks. Diversifying your retirement strategy ensures that you have both the potential for growth and the peace of mind that comes from knowing your essentials are covered.


Real Stories from Central Texas Retirees

Many of our clients at Morris & Pursley Financial Plans have experienced firsthand the comfort that comes from integrating lifetime income into their retirement plan. For instance, some new clients who joined us after a retirement income planning seminar were initially hesitant about using annuities. They shared:


“After speaking with Missy, we realized that a combination of market investments and a lifetime annuity gave us the best of both worlds—growth potential and a stable income. Now, we’re no longer worrying about market changes because we know that our core income is protected.”


Stories like theirs show that a balanced approach can work wonders, creating stability while also offering the potential for market-based growth.


Let’s Make Sure You’re Covered – Not Just Hoping for the Best

It's important to approach retirement income with both security and growth in mind. A recent study run by Morningstar's Center for Retirement and Policy Studies reports that about 45% of Americans who leave the workforce at 65 are likely to run out of money during retirement. Including a lifetime income stream as part of your retirement plan helps mitigate these worries by ensuring that you’re covered, regardless of what happens in the financial markets.


Ready to Secure Your Retirement Income? Let’s Talk.

If you’re interested in learning more about how lifetime income can enhance your retirement strategy, I’d love to help. At Morris & Pursley Financial Plans, we focus on creating a plan that meets your individual needs and provides the stability you deserve.


Schedule a consultation today to take control of your financial future.



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