Do you have enough protected income for retirement?

“I’m on a fixed income.”

Have you heard someone say that? A friend or family member dropped that phrase into a conversation about why they can’t do something meaningful like visit family far away, or make a housing change, or solve a medical problem. They’re on a fixed income, which means they have no wiggle room for an opportunity or challenge that life throws at them. They’re “fixed” in place with a fixed income, and things aren’t likely to get better as expenses for daily living — like housing, gas, medical care, prescriptions and groceries — keep getting higher.

You can avoid the “fixed income” excuse in the future by calculating your future daily expenses and creating your own sources of protected income. Why are these called “protected income”? The income that comes from these sources is pre-determined based on formulas, and they are protected from being depleted by stock market risk. Their reliability can be used as a foundation for retirement income planning.

The three most common sources of protected income are:

1) Social Security – instituted during the Great Depression, social security income is paid by the federal government to American workers at retirement age or older who have paid social security taxes for 10 years or more. Unfortunately, social security is relied upon by millions as their sole source of income in retirement.

2) Pensions – also known as defined benefit plans, pensions are retirement plans invested and paid for by employers to provide retirement income for employees. Future income to an employee is “defined” by a formula based on employment years and payments made to the plan. Pensions have become rare in America, with less than 15 percent of private employers offering them as a work benefit.

3) Annuities – often maligned in the media and not widely understood, annuities are a third source of protected income that can assist retirees with expenses. Owners of annuities accumulate funds in an annuity before retirement. Upon retirement, structured payments are made to the owner from the annuity, providing an income stream for the rest of her or his life.

What is the difference between these three protected income types? Management. Social security is managed by the government. A pension is managed by an employer. Annuities are managed by you. You can create protected income streams from annuities with prior planning and the help of an insurance professional like your local Catholic United Financial Member Advisor. Find yours by clicking here.

The “fixed income” problem can be fixed, with the help of protected income from annuities.

You might also be interested in: What do you know about annuities? Take this quiz.