Annuity Pros - Blog #Inflation

How an Annuity Ladder Can Help You Create Increasing Income

Mon, 01 Dec 2025 14:58:02 -0700

How an Annuity Ladder Can Help You Create Increasing Income

Rising living costs, longer lifespans, and unpredictable markets make retirement income planning more challenging than ever. One strategy designed to help retirees generate more income as they age—while reducing risk—is the annuity ladder.
An annuity ladder spreads your annuity purchases over time rather than buying one large contract at once. This simple structural change can significantly enhance your income flexibility and long-term financial security.

What Is an Annuity Ladder?

An annuity ladder is a strategy where you purchase multiple annuities at different times (or with different start dates), rather than committing all your money to a single annuity.

For example:

Buy one annuity now that starts paying immediately.
Buy another in five years that starts later.
Buy a third ten years from now with even higher payouts.

Each rung of the ladder has its own start date and payout rate, which creates a staggered—and often rising—stream of income.

How an Annuity Ladder Increases Income Over Time

1. Later annuities pay significantly more

Insurance companies reward you for deferring payouts—meaning the older you are when payments begin, the higher the guaranteed income.

By laddering purchases:

Early annuities give you income now.
Later annuities give you substantially higher payments because the payout rates grow with age and shortening life expectancy.

This naturally creates an increasing income stream.

2. Helps counter inflation, even without buying inflation riders

Inflation riders on annuities can be expensive. Instead of paying for a rider, a ladder can mimic inflation protection.

As each new “rung” starts paying out:

Your income jumps.
These jumps occur during times you may need more money (later retirement years when healthcare and longevity costs grow).

This step-up effect can offset inflation’s impact without relying on costly contract add-ons.

3. Reduces interest rate risk

Interest rates significantly influence annuity payouts. When rates are low, locking in an entire lump sum could mean locking in permanently lower income.

A ladder helps by:

Allowing you to buy in different interest-rate environments.
Creating opportunities to lock in higher payouts if rates rise in the future.
Reducing the risk of committing all your money during a bad rate environment.

Diversifying over time smooths out interest-rate timing risk.

4. Provides flexibility and liquidity along the way

Instead of putting a large lump sum into an irreversible contract, laddering allows you to:

Keep some money accessible for emergencies or investments.
Adjust the ladder as your needs or market conditions change.
Add or skip purchases based on your financial situation.

You're in control of how aggressively or slowly you build the ladder.

5. Offers psychological comfort and planning precision

A growing income stream is reassuring, especially in later years. A ladder can help you:

Know exactly when pay increases will occur.
Plan spending more confidently.
Reduce anxiety about outliving your assets.

This predictability is a major reason many retirees choose to ladder.

Example of How a Ladder Creates Increasing Income

An Annuity Ladder is a simple strategy to give you increasing income during your retirement years.

Step 1 | Split your investment assets in 4 e.g. $500K / 4 = $125K

Step 2 | Open 4 annuities with $125K each

Step 3 | Turn on income gradually from each annuity, waiting at least 1 year between each one to receive an increase in retirement income

If you are age 50 or older, use this knowledge to your advantage. Schedule a call with us today to set up your Annuity Ladder.

Or.. Imagine a retiree with $300,000 to allocate:

Year 0: Invest $100k → Immediate annuity pays ~$6,000 per year.
Year 5: Invest $100k → Deferred annuity starts paying ~$8,500 per year.
Year 10: Invest $100k → Deferred annuity begins paying ~$12,000 per year.

Income timeline:

Years 0–4: $6,000 per year
Years 5–9: ~$14,500 per year
Years 10+: ~$26,500 per year

This creates a natural income increase without complex riders or market risk.

Who Benefits Most from an Annuity Ladder?

A ladder can be especially helpful if you want:

Income increases later in life
Inflation resistance without buying inflation riders
Greater control over timing and cash flow
Protection against interest rate fluctuations
Peace of mind with guaranteed lifetime income

It’s well-suited for people prioritizing stability and long-term security while still wanting adaptability.

Final Thoughts

An annuity ladder is a smart, flexible strategy that turns the rigidity of traditional annuities into a dynamic income plan. By spreading purchases over time and taking advantage of higher payouts as you age, you can create a steadily rising income stream that supports your financial needs well into the future.

If you’re considering an annuity, it’s crucial to work with Annuity Pros to evaluate your goals, time horizon, and the specifics of each product type. The right annuity, used the right way, can make all the difference in your financial future.

Individuals and businesses who would like to connect with Annuity Pros can get in touch instantly via our enquiry form.

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How record inflation is affecting retirement savings

Mon, 01 Apr 2024 05:05:00 -0700

How record inflation is affecting retirement savings

Inflation has reached a level Americans have not experienced in decades. The rising cost of goods can chip away at retirement funds, and most people expect inflation to increase. The vast majority of people – 78% – expect inflation to get worse over the next 12 months, according to the new 2022 Retirement Risk Readiness Study from Allianz Life.

The big problem: Incomes are not rising at the same rate as inflation. Nearly 60% of people still in the workforce said their income is not keeping up with the rising cost of living. Forty percent of retirees said the same.

People who have yet to retire are particularly worried about how inflation will affect their ability to pay for necessities, save as much for retirement as they should, and attain the retirement lifestyle they envisioned.

They also may need to change course in order make ends meet. Around half of working people in the survey said they expect to find a job that pays more, reduce spending on necessities, or dip into their savings because of the increasing cost of living.

Because of the rising cost of living, have you had to, or do you expect to, do any of the following … the general numbers look like this:

- 53% “Find a job that pays more money”

- 52% “Reduce spending on necessities, like housing and food”

- 49% “Dip into my savings to make ends meet”

- 45% “Stop saving or reduce saving for retirement”

- 52% “Stop saving or reduce saving for my children’s college education”

Annuity Pros can determine if actions like stopping or reducing saving for retirement are necessary and can help clients think through the short- and long-term consequences. They can also assist in creating a strategy that factors in the risk of inflation to retirement savings.

Retirees have fewer that can help mitigate the risk inflation presents to retirement savings.

Guidance from Annuity Pros can support retirees who are worried about inflation and help them identify steps such as using annuities to protect their retirement income and address inflation risk.

Individuals and businesses who would like to connect with Annuity Pros can get in touch instantly via our enquiry form.

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