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Creating Guaranteed Income

Retirement Plans
  • Many people today think of Social Security as the foundation of their retirement security – considering it to be a major source of their retirement income. And for many retirees, it is. According to U.S. News & World Report1 in 2009, Social Security accounted for 38% of the total income for those 65 and older – and represented their largest source of retirement income.
    It’s been widely reported that, with a high number of retiring baby boomers and a low number of workers in the field force, changes to Social Security will be needed. Potential changes may include:
  • A reduction in payable benefits;
  • An increase in the Federal Insurance Contributions Act (FICA) tax; and/or
  • An extension of the full retirement age for future retirees.
The Social Security Administration has projected that, without any changes, by 2037, the Social Security Trust Fund will be able to pay only about 78 cents for each dollar of scheduled benefits, as estimated based on the intermediate assumptions from the Social Security Trustees’ Annual Report to Congress.

Keep Social Security in Perspective

Social Security was never intended to be your sole source of retirement Social Security was never intended to be your sole source of retirement income. For 2012, the maximum monthly Social Security benefit for a 65-year-old retiree is $2,310 or $27,720 per year. This would be your benefit only if your wages had been over the maximum amount taxable under FICA since the age of 222. For 2012, the maximum amount of income on which workers in the U.S. pay FICA tax is $110,1003.

As you can see from these numbers, you’ll also need other sources of income – such as personal savings, investments, pensions or retirement accounts – when you retire.

Create Your Plan Today for a More Financially Secure Tomorrow

While it’s likely – but of course, not certain – that a Social Security benefit will be available when you retire, it’s hard to know what your benefit will look like. So, understanding how Social Security works and visiting the Social Security Administration website (www.ssa.gov) to estimate your future benefits are good first steps in planning for retirement.

But there are other important steps you can take to help yourself prepare financially for the future. These include:
  • Participating in an employer-sponsored retirement plan (such as a 401(k) plan) and contributing as much of your salary to it as you can.
  • Using other retirement accounts – like an individual retirement arrangement (IRA) or Roth IRA – for further retirement savings and tax benefits.
  • Developing a diversified investment strategy.
  • Purchasing financial products (such as annuities) that can provide guaranteed payments for life.
  • Working with a financial professional to fully explore your options for developing your plan for retirement.

Annuities – Creating Your Source of Guaranteed Income

An annuity is issued by an insurance company and may be an appropriate choice for you when it comes time to create a guaranteed source of income for retirement. That’s because you can structure an annuity to provide you with a guaranteed income for a specified period of time. You can even choose to receive your payments over your entire lifetime. It’s a great way to help ensure that you will have income you can count on in your retirement years.

Speak with Your Financial Professional

Having a guaranteed source of lifetime income may give you the confidence and ability to enjoy retirement the way that it should be enjoyed — doing the things you love without the worry of outliving your money. So, be sure to speak with your financial professional about the role an annuity can play in giving you greater financial security in retirement.

Annuity contract guarantees are guaranteed solely by the strength and claims-paying ability of the issuing insurance company.


Prepared by The Guardian Life Insurance Company of America. The information contained in this article is for general, informational purposes only. Guardian, its subsidiaries, agents or employees do not give tax or legal advice. You should consult your tax or legal advisor regarding your individual situation.


1 Brandon, Emily. “More rely on Social Security,” MSN Money, October 27, 2011. Web. February 15, 2012.
2 Source: Social Security Administration
3 Source: Social Security Administration < http://www.ssa.gov/oact/COLA/cbb.html>