License to spend: Why guaranteed income can change retirement

Imagine it’s your birthday and there’s a large cake on the table, but you don’t know how many people are coming to celebrate. It could be anywhere from five to 40 people, but you expect around 20. How big do you make the slices to make sure there’s enough for everyone?

If you cut 20 slices, there's a 50% chance of running out. Cut 30 slices, and you might shortchange the guests who arrive on time while still leaving latecomers with nothing. You could order two cakes and discover you've wildly overspent to solve a problem that never materializes.

Retirement can work much the same way. Many people approach their golden years with a big financial “cake” – or savings – and an even bigger unanswered question: how long will I live? The fear of outliving your money, also known as longevity risk, may cause you to slice your spending too thin and set aside more than you need “just in case,” denying yourself experiences, travel or other simple pleasures you envisioned for retirement.

Transfer longevity risk in retirement

Longevity risk is a real and costly concern. Many retirees may keep excess in cash or bonds or live more frugally than necessary out of fear that their savings won’t last. Planning as if you’ll live well into your 90s or beyond can require building a large safety margin that helps ensure your income will last as long as you do. What if you could hand that responsibility to someone else? In the birthday party scenario, imagine a bakery that lets you cut the cake for the average number of guests (20 people) and promises to supply extra slices at no additional upfront cost if more guests arrive.

In a similar way, annuities are insurance products that help provide income by transferring longevity risk to an insurance company based on its experience with thousands of lives. This means you can secure the same level of reliable income with less money than if you tried to self-insure by holding bonds or other safe assets.

Many annuities can also strengthen your estate plan and help protect the legacy you want to leave behind. By listing a loved one as a beneficiary, you may be able to assign who will receive the remaining annuity payments after you pass.

Gain more flexibility with guaranteed retirement income

Let’s explore a hypothetical example that helps illustrate the efficiency of guarantees. Suppose you’re retiring at age 65 and want $2,000 per month in dependable income to cover your mortgage, health care premiums and other essential expenses. Because longevity runs in your family, you’d like to keep that money coming through age 100.

How much that future monthly income will cost you today depends on how you pay for it.

• If you decide to use Treasury bonds, you’ll have to set aside $410,997 today … and you’ll still have a 12.9% chance of running out.¹
• Instead, what if you buy an annuity with a guaranteed lifetime withdrawal benefit (GLWB)? An annuity with a 7.55% GLWB on withdrawals starting at age 65 will require a $325,000 premium today. This will allow you to withdraw $2,000 each month for life. The annuity's accumulated value will decrease over time as you withdraw income and eventually, if you live long enough, it will fall to zero. But in this case, the insurance company will continue to make the guaranteed payments for as long as you live.²
  A guaranteed lifetime withdrawal benefit (GLWB) is a feature available on some annuities that allows you to take withdrawals for life, even if the annuity’s account value goes to zero, provided withdrawals stay within the contract limits. 
• In this example, using an annuity would give you an extra $84,467. This “freedom dividend” is income that no longer needs to be set aside for the worst-case scenario. You can redirect that money toward enjoyable spending, investments with higher growth potential or building a larger legacy. Instead of thin slices, you can enjoy a fuller, more satisfying retirement “cake.”

Give yourself a “license to spend”

Even though many retirees recognize they could potentially spend more and worry less, there may still be hesitation to make the purchase. It’s natural: people fear they may lose money if they die early, or they dislike giving up liquidity or control. But for those who are fearful of running out of money, shifting a portion of their retirement income portfolio to guaranteed income can offer valuable relief.

Suddenly, you have more permission to enjoy the present. Whether you want to book that trip, take on a new hobby, remodel the kitchen or help with the grandkids’ education, an annuity can remove the burden of managing longevity risk and provide income, so you don't have to constantly ask, will this last? When you have guaranteed income you can count on — no matter what the markets do or how long you live — you can stop cutting the cake into slivers and actually start eating (and enjoying) every bite.

Want the most from your retirement? Get smarter with Smart Strategies from Athene. Your source for tips, tools and financial solutions that can help you live your best life.

¹ Society of Actuaries individual annuity mortality table adjusted for improvement to 2024, Treasury bond yields collected on July 23, 2025.

² Assumptions based on an Athene Ascent^SM Pro 7 fixed index annuity (FIA) purchased at age 65 with a $325,000 premium and single life coverage with no additional withdrawals. This product and the components and features contained within are not available in all states or firms. Please reach out to your financial professional for more details on state approvals and firm guidelines. Rates as of 05/11/2026 and subject to change.

Athene Ascent Pro ICC16 GEN (11/16) NB and Income Rider ICC24 IR (08/24) NAI, and Endorsement ICC24 EIBE (08/24) NAI or state variations issued by Athene Annuity and Life Company, West Des Moines, IA. Product features, limitations and availability vary; see the Certificate of Disclosure for details. Products not available in all states.

Guarantees provided by annuities are subject to the financial strength and claims paying ability of the issuing insurance company.