If there is one question that nearly every single client wants to know, it is, “Do I have enough to retire?” It is the question that keeps people up at night, has them agonizing about when the right time to retire is, and contemplating how much they can safely withdraw from their portfolio without running out of money.

At the heart, this is what a financial plan answers. It’s an analysis of your current expenses, goals (the vacations, renovations, new cars, etc.), and how long of a runway you need (life expectancy), and how successful you will be with a few curveballs in life (health events, loss of a spouse, market corrections, etc.). We run all the numbers and tell someone to what degree of certainty and at what age they can throw in the towel and retire.

Now, one important element of that output is the degree of certainty. A million dollars used to sound like a lot of money, but there is a rule called the Monte Carlo or 4% rule. This essentially means you can safely withdraw 4% of your portfolio value and still have a 90% chance of not running out of money. If you had $1,000,000, that is only $40,000 per year.

The problem with this is that even if you follow the 4% rule, 1 out of every 10 people still runs out of money. People are also living longer and longer, which means money needs to last longer (leading some to argue for the 3.7% rule now). Ideally, you want your withdrawal rate to be as low as possible. As a rule of thumb, we target 2% or $20,000 per million per year.

If you have guaranteed income sources like a pension or Social Security, you need to know how much of your living expenses that monthly guaranteed income covers. For most people, it isn’t even half. This is where we start to work on some strategies to fortify our client’s retirement income and, most importantly, financial security.

THE STRATEGY THAT IS EXTREMELY EFFECTIVE RIGHT NOW

Right now, one strategy that is extremely effective in the high-inflation environment is securing income annuities. Just like buying a bottle of wine, the vintage matters. And right now, it is a wonderful time. The withdrawal rates on these are the highest that they have been in 10 years. The withdrawal rates have gone up from 7.1% to 7.6% in just the last 6 months (Source: MarketWatch article )¹. Another benefit of these contracts is that the income is guaranteed for your lifetime. Now remember that 4% rule? How great would it be to nearly DOUBLE that without ever being worried about running out or your withdrawal rate having to go down when the market tanks?

WHAT THIS MEANS FOR YOUR RETIREMENT

If you take a portion of your portfolio and allocate that towards guaranteed income that you KNOW will be enough to cover your living expenses, then you can also afford to be more aggressive with the rest of your portfolio for your long-term assets. IF, and it’s a big if, you want to. The best part is that if your living expenses are covered (gas, groceries, utilities, etc.) by social security and guaranteed annuity income, then the sole purpose of your portfolio is to keep up with inflation, which would result in a very modest withdrawal rate if you even need one at all for the first several years. After that it’s just to generate fun money, hello French Rivera.

WORKING WITH A FINANCIAL PROFESSIONAL

Now, you also need to work with a financial professional to ensure that you have planned for potential health care events or long-term healthcare planning, find out what is your magic number is, and what carrier and product is right for you (think make and model). If you are looking for peace of mind and the best bang for your buck, then this is a great time to check out this strategy.

If you would like to explore whether an income annuity strategy is the right fit for your retirement plan, feel free to schedule a complimentary consultation; we can walk through the best options for your situation.

Sources:

¹ MarketWatch (2026, May 21). Annuity Payouts Are the Highest They’ve Been in Years by Brett Arends. https://www.marketwatch.com/story/annuity-payouts-are-the-highesttheyve-been-in-years-thanks-inflation-d4d3f565

Past performance is never indicative of future performance. This is not advice, but educational. Please consult a financial advisor before implementing any investment strategy to ensure it is aligned with your financial plan.

Securities and advisory services offered through Packerland Brokerage Services Inc., an unaffiliated entity – Member FINRA & SIPC.

Picture of Ariel Dangelo

Ariel Dangelo

Founder & CEO Helo | Founder & Advisor at NWS Advisors

12+ years in wealth management and corporate finance. CFP® and CFA® certified. Former advisor at Morgan Stanley, now specializing in personal finance education for high-income professionals.

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