Why Retirees Are Rethinking Their Investment-Only Plans

Retirement Planning Is A Puzzle. Here’s Why Insurance Might Be the Missing Piece.

When most people plan for retirement, the focus is usually on investments: 401(k)s, IRAs, mutual funds, and maybe a few dividend stocks.

But here’s the truth: investing alone doesn’t always give you the security and income you need to enjoy retirement with confidence. Investing is critical to the accumulation phase of retirement planning, growing your nest egg through years of compounding returns and contributions. Investing plays a smaller role during the distribution phase where contributions and growth are not prioritized, whereas income, keeping pace with inflation, and safety of principal are.

A new study by Ernst & Young shows that when you combine traditional investing with life insurance and annuities, the outcome is not just a little better, but significantly better.

Let’s talk about why.

The Big Idea: A Blend of Insurance + Investments = More Retirement Power

This study compared different retirement strategies. The big takeaway?

People who used a combination of investments, permanent life insurance, and a deferred income annuity ended up with:

• Greater retirement income

• More money left to their loved ones

• Protection against market downturns

In fact, those who followed this blended approach saw 3.5% more income in retirement and 16% more wealth left behind compared to those who relied on investments alone.

Why This Works So Well

Permanent life insurance and annuities are often misunderstood or overlooked entirely, but they play a powerful role in a well-rounded retirement plan.

Here’s how:

• Permanent life insurance builds cash value and grows tax-deferred, and can be accessed tax free. Permanent life insurance adds value to the overall portfolio by acting as a buffer asset. While and IRA or 401K may decline due to a down market, the cash values in a life insurance policy remain consistent. Life insurance companies have paid out dividends through the Great Depression, World War 1 & 2, the Great Financial Crisis, Covid. Needless to say, that this vehicle is safe and consistent. The cash value acts like a buffer in down years, instead of selling stocks low, or at a loss, the cash value is accessed instead. Which allows the 401K or IRA account to recover. By having a buffer asset in your portfolio you can add years to your investment accounts.

• Deferred income annuities turn part of your savings into guaranteed income for life. The idea is to replace your paycheck in retirement. Social security will help accomplish this partially, but there is typically a gap. By allocating a portion of your portfolio into an annuity, you can bridge the gap between social security and your living expenses. This will enable you to enjoy disposable income from your investment accounts. And income payments are contractually guaranteed to last your entire life, even if the account has been depleted.

When markets are up, you win.
When markets are down, these allocations help protect your lifestyle.

It’s not about replacing your investments, it’s about adding balance, safety, and certainty.

Who Should Consider This?

This strategy should be at least considered by anyone that will retire one day.. But if you're someone who wants:

• A reliable paycheck in retirement

• Tax-Free income

• Protection from market risk and volatility

• A way to pass on more to their family

• More control over how and when they use their retirement money

Then it may not hurt to explore this topic further.

Next Steps

Here’s what you can do right now:

1. Think about your retirement goals. How much income do you need? How much income do you want? Is leaving a legacy important?

2. Get precise with your portfolio. How much is there today? How is your portfolio allocated? What is the average rate of return? What is my project social security? What guaranteed income sources will I have?

3. Run the numbers. Either by yourself or with an advisor that way you can get an idea of what retirement will look like for you.

Final Thoughts

This isn’t about choosing between growth, income and safety. It’s about building a retirement plan that can accomplish all three.

Investments can give you growth.
Insurance and annuities can give you guarantees.
Together, they can give you peace of mind.

If you're nearing retirement and wondering how to create predictable income, protect against volatility, and still grow your portfolio, this approach might be suitable for you.

Want a retirement income plan that’s built to last?
Let’s connect and map it out.