This is the first exercise of the 2026 retirement challenge that most people actually enjoy. The first episode was all about purpose and understanding why you will retire. The second episode was about spending. I’ve discovered that most people really don’t like the word budget.
Today we’re going to add up how much guaranteed income you will have in retirement.
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Transcript:
Episode 469 – Guaranteed Income – 2026 Retirement Challenge (Part 3)
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Announcer: Welcome back America to Sound Retirement Radio, where we bring you concepts, ideas, and strategies designed to help you achieve clarity, confidence, and freedom as you prepare for and transition through retirement. And now here is your host, Jason Parker,
Jason Parker: America. Welcome back to another round of Sound Retirement Radio.
You’re listening to episode number 469. This is part of the 2026 Retirement Challenge. This is part three and it, the subject today is guaranteed retirement income. In today’s episode, we’re gonna do something really simple, but something very powerful. This is the first exercise of the 2026 retirement Challenge that most people actually enjoy.
The first episode was all about purpose and understanding why you are gonna retire. This second episode is all about spending, and I’ve discovered that most people don’t really like the word budget, so they don’t like to sit down and talk about how much they plan to spend. Today, we’re gonna add up how much guaranteed income you’re gonna have in retirement.
For most people, the only truly guaranteed income they’re gonna have in retirement is social security. Some will also have a pension. Others may own an annuity contract that provides guaranteed lifetime income, and some will receive income from rental properties. Now. Rental income isn’t technically guaranteed.
Tenants move out, repairs happen, but from my experience, it can often be really reliable source of income that’s inflation adjusted. My dad used to say that the only things in life that are guaranteed are death and taxes. By the end of this episode, you’re gonna know exactly how much guaranteed income you can count on, and more importantly, how that compares to your essential expenses.
Most people skip this step entirely, but this comparison forms the foundation of what I call your secure income score. It’s a simple way to measure how secure your retirement really is. But before we get into today’s episode, let’s take a minute to renew our mind. This is a verse that I’ve been singing to myself.
It’s from Psalms 62 verse two. Truly, he is my rock and my salvation. He is my fortress. I will never be shaken. And then something fun for the grandkids. I started investing in stocks, beef, chicken, vegetable. One day I hope to be a billionaire. I don’t know. Uh, why don’t eggs tell jokes? They’d crack each other up.
Last week I traveled to Mesa, Arizona to play in the Mesa Cup. It’s a pickleball tournament. My friend Mike and I earned a silver medal in our age bracket, and we even got our picture taken with Ben Johns and Anna Lee Waters, two of the best pickleball players in the world. And it was kind of a funny story.
We were getting ready to, we had a court assigned to us to go play pickleball, and we looked over and my friend Mike says, uh, do you wanna be the one to kick Anna Lee Waters off the court? And I said, yes, I do. So I, I went up to him and I said, Hey, you guys, this is our court, but since we’re kicking you off, can we get our picture taken?
And they were very gracious and fun, and let us get a, get a picture. So that was, that was even better than the medal that we took home. It was a great trip. One of the things that really stood out to me was the Phoenix Airport. When we landed, we boarded a train to the rental car facility. Everything was seamless.
There were clear signs. It was a logical flow. There was no confusion. We walked straight to our car, picked the one we wanted, found the keys in the center console, and we drove out One of the nice little touches that I enjoyed on the train ride. Was, um, over the speakers, there was an announcement that said that, uh, the Phoenix Airport was the friendliest airport.
Something to that effect. And I just thought, wow, this is so beautifully designed. And when something is designed well, you feel it. You hear it, you see it. There’s no friction, there’s no second guessing, and you just move forward. Confide. And retirement planning should feel like that. It’s clear, intentional, thoughtful.
When something’s designed well, you talk about it, at least I do. So today we’re gonna bring in some design to your retirement plan by simply adding up your guaranteed income in retirement. At its core, retirement is an exercise in cash flow. It’s your income versus your expenses, your income versus your spending.
And in episode number 468, we focused on the spending side of things. Today we focus on the income side of things. For most people, that begins with social security. So what I want you to do is go to the social security website ssa.gov and download your social security statement. On the first page, you’re gonna see three critical numbers.
It shows what your benefit will be at age 62, what your benefit will be at your full retirement age, which for most people is now age 67, and then what your benefit would be at age 70. And I want you to write those three numbers down. And then I want you to have your spouse do the exact same exercise.
Let me walk you through a quick example. If your full retirement age benefit at age 67 would be $3,500 per month, the statement shows you that if you start your benefits early at 62, it reduces that benefit by about 30%. So you would get $2,450 per month instead of the 3,500 per month at age 67. And if you wait until age 70 to start your benefit, your benefit is, has increased by 8% per year, or 24% beyond your full retirement age.
So it would be $4,340 per month if you were to start at age 70. That’s nearly a $1,900 per month swing between age 62 and 70. So this decision matters not just because of how much income you’ll receive, but because social security’s incredibly valuable income. It’s tax efficient. It’s adjusted for inflation.
It includes spousal and survivor benefits. It’s truly one of the most powerful sources of retirement income available, and it’s something we need to think carefully about optimizing before we make a decision on when we start. Now, when you combine your benefits with your spouse. If both spouses had the identical social security benefit, and that’s rarely the case, but just for the sake of this exercise at 62, you would have combined income of $4,900 per month if you both waited until age 67.
Um, remember it was $3,500 per month. Per person, so you’d have $7,000 per month of combined income, and if you waited all the way till 70, then your combined income would be $8,680 per month. Now that we have your social security income dialed in, some people will also enjoy a, some pension income. Maybe it’s a federal pension, maybe it’s a working for the state government.
Maybe it was a private employer. But in this case, let’s just say that this particular couple’s gonna have $3,000 per month of pension income starting at age 67. So we could look at their plan and say, okay, well, combined between the two of them, they’re gonna have $7,000 a month of social security. He’s gonna have a pension of another $3,000 per month.
So they have 10,000 per month of total guaranteed income. And this number matters because it continues regardless of what the stock market’s doing. It’s your stable foundation. One person that we met with once called it his beer and pizza money, the income that keeps life running no matter what. And don’t assume that your spouse doesn’t qualify for social security just because he or she stayed home to raise the kids.
Spousal benefits may be available. In some cases, even a divorced spouse may qualify for benefits based on a former spouse’s work record. So before you underestimate your guaranteed income, make sure you check. This is one of the most common blind spots we see. People often don’t realize that there’s a spousal benefit available.
And we wanna make sure that we’re thinking about that and optimizing for not just one person’s Social Security, but two people’s Social Security over your lifetime. Now on page four of your social security statement, you’re gonna see a statement, a notice that says this, the Social Security Trust funds are projected to pay full benefits until 2034.
After that, under current law, about 81% of scheduled benefits could be paid. This is, um, something that the Social Security Trustees report puts out every year. They, they tell us how long, uh, benefits are gonna last. Now, it doesn’t mean that Social Security disappears in 2034. It does mean that we need to plan thoughtfully.
If it’s possible that Social Security could decline in eight years. We wanna know what impact that would have on your cashflow. Ignoring the risk is not a strategy. Accounting for it is in the last episode, number 468. We divided expenses into two categories. We had your essential expenses and your discretionary expenses.
For this step, focus only on your essential expenses. Let’s say your guaranteed income is $6,000 per month and your essential expenses are $10,000 per month. 6,000 divided by 10,000 equals 60%. That’s. A 60% secure income score. Ideally, we want essential expenses fully covered by guaranteed income a hundred percent or more.
But even if you can reach 80% and you have retirement investments to supplement the rest, you should feel reasonably confident in your plan because when most of your basics are covered, housing, food, insurance, utilities, you just gain a tremendous sense of freedom with the rest of your investment portfolio.
You’re not gonna worry as much when there’s volatility in the market. And markets fluctuate and returns will vary, but your core life remains secure when you optimize for both your guaranteed income and your essential expenses. Here’s where it gets a little bit more nuanced. Your pension may start at 62 and maybe you’re considering starting Social Security at 67 or even 70.
Income streams don’t always begin at the same time, and there’s a lot of people who retire at age 60, but they wait until age 70 to start Social Security. So while the simple ratio is helpful, a more accurate method to determine your secure income score is to compare total guaranteed income over your lifetime to your total essential expenses over your lifetime.
But even this basic calculation of comparing one year of income versus one year of essential expenses creates a lot of clarity, and clarity builds confidence. Now at this point, you’re probably thinking, well, Jason, what about my 401k, my IRA, my Roth, my brokerage account? Don’t worry, we’re getting there.
That’s coming next week. Today, I want to focus on one thing. How much of your essential life is already covered by guaranteed income before you ever touch your investments? Because once you understand that foundation, everything else is gonna become so much clearer and so much easier to design. If today’s exercise helped you see how important guaranteed income is in retirement, then the next step is understanding how your investments fit on top of that foundation.
And that’s exactly what I’m gonna be covering in our upcoming webinar called Investing in Retirement That’s gonna be taking place on March 3rd. This webinar is not gonna be recorded, and I’m gonna talk about how to think about risk in retirement, what true diversification looks like, and how to evaluate whether your plan is positioned for long-term success.
I’ll include a link in the show notes@soundretirementplanning.com. Just click on episode number 469 and you can click on the registration link to attend the webinar. I hope you can make it.
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