The "income gap" is the difference between what you need in retirement and what you have coming in from reliable sources. This is how you find yours.
You don't need special software, and you don't need a meeting with anyone. Ten minutes, a pen, and the back of an envelope will do.
Step 1: What does your lifestyle cost?
Not a fantasy budget. Your real monthly expenses — housing, food, healthcare, insurance, transportation, and the things that make life worth living (travel, hobbies, spoiling the grandkids). Write down one monthly number.
Step 2: What income do you have locked in?
Social Security, pensions, rental income, part-time work — anything that shows up reliably every month without you having to sell something to generate it. Write that number down too.
Step 3: Subtract.
Locked-in income minus lifestyle cost. If the result is negative, that shortfall is your income gap — the amount of additional monthly income you'd need to build. That one number becomes the starting point for every conversation about your retirement strategy.
Why this matters now
Most people I work with know roughly what they've saved. Far fewer know what that savings actually translates to in monthly income. There's a big difference between "I have $500,000" and "I can reliably generate $2,500/month from my savings for the next 30 years."
This exercise helps you see the difference.
What to do with your number
Once you've done the math, you'll be in one of three situations:
- Your income covers your expenses. Great — you're in strong shape. The conversation becomes about protecting what you have.
- There's a small gap. Minor adjustments — timing Social Security differently, reallocating a portion of savings — could close it.
- There's a significant gap. This is where a focused plan matters most. And it's where tools like annuities may play a meaningful role.
Whatever your number is, knowing it puts you ahead of most people.
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Author of Indexed Annuity Secrets and founder of Pacific Ridgeway Insurance Solutions in San Diego. Navy veteran. Licensed financial professional, CA #4132743.
Fixed indexed annuities are insurance products, not investments. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. This article is for educational purposes only and is not financial, investment, tax, or insurance advice.