Social Security likely won't cover all of your expenses in retirement, and the prevalence of pensions is dwindling. This leaves those planning for retirement to piece together how they will create lifetime income for themselves during their golden years.
Annuities are the only product that can provide guaranteed lifetime income, but other tools -- like bonds, dividend stocks and real estate -- can add stability and flexibility.
There's no universal formula for creating lifetime income. The right approach depends on your risk tolerance, resources and retirement goals.
If you're serious about financial security in retirement, you can't rely on Social Security alone.
For most people, those checks cover only a fraction of their living expenses. According to the Social Security Administration, the average monthly benefit for retired workers as of July 2025 was about $2,000 a month. That barely covers rent in many cities, let alone food, health care and everything else you'll need over decades in retirement.
The pension era is also over for most workers. Outside of government jobs, pensions have largely disappeared as companies shifted the onus of saving for retirement to employees via 401(k)s and IRAs. According to the Bureau of Labor Statistics, only 15 percent of private industry (non-government) workers had access to a pension in 2023. So for most Americans, their retirement income largely depends on how well they save, invest and structure their own portfolio.
That means you'll likely need to piece together multiple sources if you want to create lifetime income -- money you can rely on every month, no matter how long you live.
"Combining a variety of income streams with differing levels of growth potential, flexibility and guarantees will provide a solid balance for most retirees," says Stephen Kates, CFP and financial analyst for Bankrate.
Here are five ways to get on the path to lifetime income so you can sustain cash flow for the long haul.
1. Buy a single premium immediate annuity (SPIA)
A single-premium immediate annuity, or SPIA, is the most straightforward version of an annuity. You give an insurance company a lump sum -- say $100,000 -- and in return, the insurer guarantees you a fixed monthly check for the rest of your life. Payments usually begin within one year of signing the annuity contract.
What sets SPIAs apart is their simplicity. Unlike variable annuities, which tie payouts to the performance of mutual fund-like subaccounts, or indexed annuities, which use formulas linked to stock market indexes, SPIAs aren't linked to the market.