Here's something that surprises most people when I bring it up: a pension and an annuity do roughly the same thing.
A pension takes money your employer set aside over your career, pools it with everyone else's contributions, and pays you a monthly income for life.
An annuity takes money you set aside, hands it to an insurance company, and they pay you a monthly income — potentially for life.
Same concept. Different sponsor.
Why does this matter?
Because most people today don't have pensions. In 1980, about 38% of private workers had defined benefit pension plans. Today, it's under 15%. The shift to 401(k)s put the responsibility on you to figure out how to turn a pile of money into a paycheck.
That's not easy. Ask anyone who's tried to decide how much they can pull from their portfolio each year without running out.
A client I'll call Rob came to a meeting with about $2 million in retirement assets. He was sharp, well-read, had done his own research. But his biggest concern was simple: "How do I turn this into a reliable income without watching the market every day?"
We walked through what a portion of his money could look like if it were structured to produce income — like a pension he'd build himself. The rest stayed positioned for potential growth and liquidity.
He didn't need to move everything. He just needed a portion working as a predictable floor.
The key difference is who controls the decision
With a pension, your employer chose the terms. With an annuity, you do. You pick the amount, the start date, the features, and the company.
That's more power — but it also means more homework. And that's where having someone walk you through it matters.
If you've ever thought "I wish I had a pension," it may be worth exploring what a personal income plan could look like for you.
Get the book free
Indexed Annuity Secrets walks through all of this in plain English — the 0% floor, surrender periods, the questions to ask before you sign anything.
Get your free copyBook a 15-minute call
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.