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How Do You Know If You Have Enough Money To Retire?

Carl Ostenson

That’s a great question people ask themselves all the time. What I’d like to do it re-phrase it into a question that I think gets to the core of the matter with a little more clarity.

“Will your Social Security and/or Pension be enough retirement income to pay your bills and have a little fun… OR… will you need more income than that? 

Because, if Social Security and/or your pension is enough income, then you don’t really have to worry about how much money you have saved up. In fact you could have ZERO saved for retirement. If your pension is $60,000 per year and your expenses are only $50,000 a year, you are sitting pretty.

However, for most people, Social Security and/or pension is NOT enough income, and they will need extra income from their IRAs and 401k to pay their expenses.

So having enough CONSISTENT INCOME is really what matters.

Income. Cash Flow. If you know for certain that you have enough coming in every month, without fail, then all the little problems seem easier.

  • Easier to budget
  • Easier to pay bills
  • Easier to stop worrying about running out of money
  • Easier to stomach ups and downs of the stock market
  • It will also probably make it easier to sleep at night

Most of us will have an “Income Gap” when we stop working. Here’s a simple example of a couple whose only steady income when they retire will be Social Security.

$3,000 INCOME: Total combined income from Social Security

$5,000 EXPENSES: Total expenses such as taxes, insurance, utilities, food, etc.

So they will be $2,000 short every month… this shortage is called the INCOME GAP.

In most case you will rely on your IRA, 401k or other retirement saving to generate the necessary income to fill your Income Gap.

“For piece of mind during retirement, it’s really important that you solve for your INCOME GAP with as much certainty and guarantees as you can get.”

 You don’t want your base retirement income to be dependent on the ups and downs of mutual funds or the stock market. You want to be 100% sure that no matter what happens in the economy, or the market, that you keep getting your base monthly income, month after month and year after year, without fail. Then, once you know you have your income needs met with as much certainty as possible, you can invest the rest of your money however you want.

This a pretty simple concept, and it will reduce your anxiety about living too long or running out of money. I promise.

What’s the Right Tool to Solve for Your INCOME GAP?

A hammer is really good at pounding in nails. A saw is really good at cutting wood, but try to use a hammer to saw a piece of wood and it doesn’t work very well.

That’s the problem with many advisers. They have a hammer and everything looks like a nail to them. Instead of using the right tool for the right job, they try and use mutual funds and investments to do everything.

  • Bank accounts are really good at being liquid and paying bills
  • Mutual Funds and Stocks are really good at long term potential growth
  • Annuities are really good at providing secure and predictable income

If you want “Secure and Predictable” income. Then you will need to move a portion of your money into the right type of account to do that.

It’s a simple as that. Use a portion of your total nest egg to create your own “Personal Pension”

Figure out how much your INCOME GAP is and then put enough money into an annuity to provide you with the income you need.

Then invest whatever is left over however you want because even if you lose it all, you know you have your income needs met.

Click here (Carl Ostenson) to see more of this author’s articles.

About the Author:

Carl Ostenson specializes in helping his clients use their IRA or 401k to set up their Retirement Income Plan for when they retire. He works with clients in the Chicagoland area and surrounding suburbs.

If you live in Chicagoland and want to talk about annuities with a local guy, give Carl a call at 847-376-8400… there’s never any pressure. To get more about Carl, visit:

Be sure to check out his Free IRA Guide titled “How to Get Secure and Predictable Income From Your IRA/401k When You Retire.”


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