Why Variable Lifetime Income
Two risks, two disciplines, one retirement income strategy
Retirement changes the role of your savings. The challenge is no longer simply accumulating wealth but transforming retirement assets into dependable income that may last for decades.
Variable annuities represented nearly $2 trillion of U.S. retirement assets at the end of 2025—approximately 1% of total U.S. household wealth.¹ Yet for many retirees, one of the market's least understood features is the opportunity to convert those assets into guaranteed variable income.
Professionally managed variable income combines two distinct
"the nastiest, hardest problem in finance."
Decumulation—the process of converting retirement savings into income.
— William Sharpe, Nobel Laureate
disciplines to address retirement's greatest financial risks. Insurance guarantees help address longevity risk, while professionally managed participation in the capital markets seeks to preserve purchasing power over time.
With inflation-adjusted annuities no longer available in the private market, preserving—or increasing—purchasing power may require accepting prudent investment risk within a professionally managed retirement income strategy.
Inflation
Payment certainty. Purchasing power uncertainty.
One of retirement's greatest financial risks isn't market volatility—it's inflation. Guaranteed income provides payment certainty, but preserving what those payments can buy over decades may require participation in the capital markets.
For example, a $1,000 fixed monthly payment purchased in January 2020, immediately before the highest inflation surge in more than forty years, had the purchasing power of approximately $785 by January 2026.²
Longetivity
Income that lasts a long life
Longevity is one of retirement's greatest financial challenges. Mortality credits transform the uncertainty of a long life into a shared insurance advantage, creating guaranteed lifetime income that investments alone cannot provide.
Consider these longevity probabilities for 65-year-olds in just average health:³
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Most men will live beyond age 86; most women beyond age 89.
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One in four men will live beyond age 92; one in four women beyond age 94.
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One in ten opposite-sex couples has at least one spouse expected to live to 100.
Every retirement is different, but the questions below explain why economists, actuaries, and retirement specialists have studied lifetime income for decades—and why it remains one of retirement's least understood strategies.
Why is retirement investing different?
Building wealth and generating retirement income require different financial disciplines. Retirement shifts the objective from maximizing portfolio value to creating dependable lifetime income.
Why does lifetime income matter?
Why have economists spent decades studying lifetime income? Research consistently shows that longevity protection can improve retirement efficiency by addressing the risk of outliving your assets.
What is the missing return?
Traditional investment portfolios generate dividends, interest, and capital appreciation—but they cannot create mortality credits. Understanding this "missing return" helps explain why lifetime income differs from a withdrawal strategy.
How can I protect purchasing power?
Inflation and rising healthcare costs can erode retirement spending over time. Variable lifetime income combines guaranteed lifetime payments with continued participation in the capital markets to help address purchasing power.
Can I leave a legacy?
Lifetime income and leaving an inheritance aren't necessarily competing goals. Thoughtful retirement income strategies can balance guaranteed income, investment flexibility, liquidity, and legacy objectives.
How are advisory variable annuities different?
Today's advisory variable annuities differ significantly from many traditional products through lower costs, institutional investment options, fiduciary management, and greater transparency.
Is variable lifetime income right for me?
Variable lifetime income isn't appropriate for everyone. It requires liquidity. The more important question is whether it belongs in your retirement strategy—and if so, how much, when, and how it should integrate with your broader financial goals.
Footnotes ¹ Board of Governors of the Federal Reserve System. Financial Accounts of the United States (Z.1), 2025, Table B.101.h, Household Balance Sheet; Table L.122, Life Insurance Companies; GPCM. Z.1 and ICI refer to variable annuity separate accounts as "variable annuity mutual funds." ² U.S. Bureau of Labor Statistics (BLS) Consumer Price Index (CPI); GPCM. ³ American Academy of Actuaries & Society of Actuaries Research Institute. (2026). Actuaries Longevity Illustrator—Terms of Use and Disclosures. https://longevityillustrator.org.