For years, conventional wisdom in retirement planning followed a familiar script:
Fund the 401(k). Max out the IRA. If there’s money left over, maybe consider an annuity.

That hierarchy made sense in a world where retirement planning was almost entirely about accumulation — where market growth, tax deferral, and account flexibility were the primary goals. But retirement itself has changed. Longevity has increased. Pensions have declined. Market volatility has intensified. And clients are no longer asking only “How much can I grow?” — they’re asking, “How do I make this last?”

So, the real question today isn’t whether annuities still “belong” in a portfolio.
It’s where they belong — and what role they are meant to play.

The old rule: Accumulate first, insure later

The traditional funding order — 401(k), IRA, then annuity — was built on three assumptions:

1. Markets would do the heavy lifting
Growth oriented assets were expected to carry most of the retirement burden.

2. Income could be created later
Systematic withdrawals, rules of thumb like the 4% rule, and bond ladders were commonly used to convert assets into income.

3. Insurance was a last resort
Annuities were viewed as expensive, illiquid, and best used only when other options were exhausted.

In an accumulation‑only mindset, that logic holds. But retirement isn’t just accumulation — it’s decumulation under uncertainty.

What’s changed: Retirement is now a risk‑management problem

Modern retirement planning must address risks that traditional portfolios may not be designed to manage on their own:

• Longevity risk (living longer than expected)
• Sequence‑of‑returns risk (poor market performance early in retirement)
• Behavioral risk (clients underspending or reacting emotionally during volatility)
• Income timing risk (needing cash when markets are down)

Annuities can be used to help address some of these risks — not to compete with 401(k)s or IRAs, but to complement them.

Importantly, recent regulatory changes and product innovation have also shifted the conversation. Annuities can now be held within qualified plans, and newer designs often emphasize flexibility, transparency, and clearly defined objectives rather than accumulation alone.

A better question: What job is each dollar doing?

Instead of asking, “Should we fund an annuity after everything else?”
A more useful framework is: What role does each portion of the portfolio need to play?

Growth capital

Focused on long‑term appreciation. Accepts volatility. Typically aligned with equities and market‑based assets.

Liquidity capital

Covers near‑term spending needs. Requires accessibility and stability. Often held in cash or short‑duration instruments.

Income capital

Meant to produce reliable, durable income. Prioritizes predictability over upside.
This is a role annuities may be well positioned to serve.

Seen through this lens, annuities are not “leftover money vehicles.”
They are income‑focused tools.

So … How much of a portfolio belongs in an annuity?

There is no universal percentage — and that’s the point.

Rather than anchoring on a number, consider these guiding principles:

Cover essential expenses with sources of guaranteed income.

Social Security, pensions, and annuity income can be layered together to create a personal paycheck that is designed to provide a more stable source of income.

Use annuities as a fixed‑income complement – not a stock replacement.

For many clients, annuities may replace a portion of fixed income — not growth assets — particularly in a low real‑return bond environment.

Think in phases, not all at once.

Annuities can be deferred, laddered, or introduced gradually to support later retirement needs while preserving early‑retirement flexibility.

Does the old funding order still hold water?

Partially — but it’s incomplete.

Tax‑advantaged accounts like 401(k)s and IRAs remain powerful accumulation tools. But treating annuities as something you only fund after everything else assumes retirement risk can be managed solely through markets.

For many clients, that assumption no longer holds.

A modern approach doesn’t ask, “Have we maxed out every other account yet?”
It asks, “Have we built a portfolio designed to support income with confidence over time and manage market risk?”

When viewed that way, annuities stop being an afterthought — and start becoming part of the architecture.

The bottom line

Annuities are not about beating the market. They are about changing the conversation from assets to outcomes.

The appropriate amount of annuities in a portfolio is driven not by tradition or leftover dollars, but by how much income a client needs to feel comfortable entering retirement.

And in today’s retirement landscape, certainty has become one of the most valuable assets of all.

The Internal Revenue Service (IRS) updates the eligibility guidelines and contribution limits for certain employer-sponsored plans and individual retirement accounts (IRAs). Higher “catch up” contribution limits are also set for those ages 50 and over who are closer to retirement.

An individual or couple’s eligibility to contribute to an IRA (like a Roth IRA), or deduct the contributions made, can be impacted by their filing status and income. These guidelines are outlined on the IRS website.

These restrictions can make it harder for those earning a higher income to save enough for retirement. Thankfully, products like annuities and permanent life insurance can often serve as a helpful IRA alternative to help these individuals build tax-advantaged financial resources for retirement.

As people age, many believe they have less of a need for the death benefit of life insurance. However, there are very important ways life insurance can make your retirement more comfortable and secure. Here are a few benefits to owning life insurance in retirement:

Ensure money for your family with a death benefit

One of the best things about adding life insurance to a retirement plan is the freedom it can provide.

With a permanent life insurance policy as part of a retirement plan, life insurance can help maintain your spouse’s lifestyle at your death as well as provide the legacy you hope to leave to the next generation.

In addition, the money from the death benefit may be available to pay for end of life medical costs, taxes on retirement assets, or simply as an additional benefit to be distributed as you choose.

If properly structured, life insurance death benefits pass income tax-free to your beneficiaries and can be removed from the taxable estate. Since death benefit proceeds can provide the funds needed to pay estate and income taxes as well as financial expenses, life insurance is often the most cost-effective means for protecting your estate.

Additional help in the event of a chronic or terminal illness

Some policies have the ability to add a rider that can accelerate the payment of the death benefit if the insured needs care for a chronic or terminal illness. This benefit can provide you with additional financial resources at a time when you may need them the most. Best of all, the payment of the benefit is not tied to a particular course of treatment, but can be used as you need to use it, for whatever purpose suits you best.

Acceleration of the death benefit during the insured’s lifetime will reduce the future benefit payable upon their death. As with any significant financial decision, you should consult with your financial advisor so that you can make the best decision for you and your family.

Reserve cash value for the unexpected

The cash value in permanent life insurance can also give you financial security when unexpected (or higher than expected) expenses arise during retirement. That might include needing a temporary boost to your retirement income, covering a large purchase or repair cost, or helping to cover the costs of health or long-term care.

Depending on your circumstances, it might make sense to either withdraw some of the cash value from the policy (known as a “partial surrender”), or take a loan against the policy. Unlike loans from a bank, there is no credit check or income verification required to access the available cash value of your life insurance policy. This ensures that you have access to the money when you need it most. Your financial professional can help you understand the differences between partial surrenders and loans, and decide what is best for your needs.

Have a non-traditional solution to tax uncertainties

Permanent life insurance, when purchased in conjunction with other retirement investments, may provide an ideal way to help tax-diversify your retirement savings. How?

• Withdrawals and loans from your policy values are generally income tax-free to you under the Internal Revenue Code.*
• Because withdrawals and loans can be taken on an income tax-free basis, they do not typically subject your Social Security income to taxation, unlike income from other sources.
• There is no 10% penalty tax on cash values distributed prior to age 59½ (as long as the policy is not classified as a modified endowment contract).
• You decide when, or if, to take distributions because there are no required minimum distribution rules.

Buffer market volatility with permanent life insurance

Qualified retirement savings accounts, such as 401(k) and IRAs can be helpful tools for building up assets for retirement. But, when it comes time to get money for retirement, it involves selling off shares of the investments.

When the market is doing well, that’s no problem. But if the market is down, you may be selling more shares of your investments than you want in order to get the same income you need. That also means you may be depleting your account too quickly, and jeopardizing your future retirement income security.

Most permanent life insurance policies have the ability to build up cash value. While there are different types of permanent life insurance, many have protections in place that shield the cash value from market volatility. That means you can potentially use this asset for retirement expenses during investment downturns and allow your investment accounts to rebound in value.

Next steps

Talk to your AuguStar financial professional today about using life insurance to supplement a retirement plan.

Everyone wants to know that all of our hard work will go on to make it just a little easier for the ones that we leave behind. We want to know that we not only made memories, but also helped bring peace, protection and stability to those we love or the businesses that we built.

There are many ways to pass on our wealth – through wills, trusts, gifts, etc. What many people don’t realize is that life insurance can be used to share resources with the ones we love.

Here are some ways to help your love live on.

It’s for your loved ones – however you define them

You don’t have to be married or have children to provide for the ones you love. As you think about life insurance, think about loved ones who depend on your income.

Or, consider those that you would like to leave a special gift. This may include parents, grandparents, siblings, nieces/nephews, relatives with special needs, live-in partners or special friends.

Knowing the right amount of life insurance you should have can be challenging. Here are some starting points to finding out how much life insurance you need. A financial professional can also help you determine the life insurance amount you may need.

As a gift for a child

A series of gifted premium payments to a permanent life insurance policy can provide grandchildren, nieces or nephews with additional education and financial opportunities.

The tax-deferred savings that accumulate within the policy can be accessed for various purposes, including a college education, business opportunity, or a down payment on a home.

In addition, the cash value can also help supplement retirement income later in the child’s life. It’s the gift that keeps on giving.

To support your favorite causes

The gift of life insurance is an economical and tax-advantaged way to benefit your favorite charities using either an existing life insurance policy or a new policy.

For donations to qualify for a tax deduction, they must be made to a qualified charitable organization, or specifically, a 501(c)(3) organization. Generally, qualified charitable organizations include religious, scientific, literary, educational, government and veterans’ organizations.

Ensure that your business continues smoothly

Planning for the continuation of a business is important, especially a business with more than one owner. It’s also about caring for business partners you’ve worked hard to build the business with, and ensuring your business will continue to be there for your employees and customers who have grown to rely on the goods or services you provide.

Life insurance can be an important part of your business continuation plan, allowing the partner(s) to buy out the other partner for a smooth transition.

It’s an important part of your financial plan that can bring peace to both your family and your business partner(s), knowing that both will continue on.

Next steps

The people and things in our life that we care about most are worth protecting. Work with your financial professional to see how you can let your love live on for the ones you love.

If you’re saving for the future, or have already built up a sizable retirement nest egg, you’re off to a great start. But achieving the retirement you envisioned takes more than just saving. A successful retirement plan requires building up savings, and then turning those savings into lasting retirement income. 

Annuities can help you:

• Ensure retirement income: Annuities offer multiple income payment options, including guaranteed income for life.
• Increase retirement assets: Annuities may offer growth opportunities with higher return potential than CDs, treasuries or other fixed investments.
• Leave a legacy: Annuities’ death benefits can help ensure that the assets you built for retirement are able to help protect the people and causes you care about once you’re gone.

Annuities can provide an extra layer of protection, while also helping you build up the assets you’ll need to not only survive retirement, but also thrive throughout retirement.

For example, Fixed Indexed Annuities may offer higher growth potential than CDs or treasuries and ensure you can’t lose any retirement assets due to poor market performance. They can also provide an income stream that’s guaranteed to last throughout the rest of your life.

Consider these important factors

As you and your financial professional build a retirement income strategy, consider important factors like:

• Your planned retirement age and future income needs
• Employer benefits, personal savings, and estimated government benefits
• Your current and future savings capability
• Your risk tolerance, and how it may evolve over time

Together, you can find solutions that fit your needs and budget, and help all of the pieces of your plan work in harmony.

If you’re like most people, you’ll work your entire lifetime to accumulate assets: a home, cars, savings, real estate, investments, etc.

The comparatively small amount of time and money required to create an estate plan will help ensure that your assets are passed on with the best possible tax consequences to your beneficiaries.

A good estate plan will:

• Ensure that your wealth reaches the individuals or organizations you select, in the manner that you choose
• Help to minimize the effect of federal and state taxes
• Help to ensure settlement costs are paid without jeopardizing your family’s inheritance

Here are four basic estate planning steps.

Take an inventory of your assets

Your inventory should include your home, jewelry, stocks and bonds, bank accounts, insurance policies, retirement plans, and other property. Note how they are owned. Next, take a similar inventory of your debts and liabilities.

This estate planning workbook can help you track your assets.

Determine your estate goals

For example, do you want all your assets to go to your family? Do you want any assets to go to charity? Do any of your children have special educational, medical, or financial needs?

Your goals can also be documented on the estate planning tool. More importantly, the final wishes need to be included in your will or trust. An estate planning attorney can guide you through this process and draft important documents.

Develop an organized plan for the payment of taxes and expenses

The payment of state and federal taxes cannot always be avoided. There are options for meeting tax liabilities:

• Use existing liquid assets.
• Sell estate assets which could result in the assets being sold at a loss due to forced sale conditions.
• Life insurance is often the most cost-effective solution as it is generally income tax-free and can be used to pay taxes and estate settlement costs, thus protecting the value of your estate.

Review your plan

At a minimum, your estate plan should be reviewed every three to five years or any time your life or circumstances change dramatically. If you encounter any of the following changes, they can alter your estate plan significantly:

• Marital status
• Ownership or value of property
• Birth of a child or grandchild
• Tax laws
• Income or employment status
• Business ownership
• Relocation

Periodically reviewing any wills and trusts will help to ensure that your plan still accomplishes your goals in a tax-efficient manner.

Now is the time to plan

There is little that can be done after death to create a plan. By working with your financial professional now, you can enjoy the peace of mind knowing that a plan is in place to help preserve your estate for your beneficiaries.

You may have heard of a Roth IRA as a good option for retirement planning. Its favorable tax treatment allows after-tax contributions, tax-deferred growth, and tax-free distributions at retirement. The drawback? A Roth IRA is not available for everyone and has limits to how much you can contribute.

But another vehicle that may be able to provide you with features similar to a Roth IRA – along with other benefits – is permanent life insurance. Take a closer look at how permanent life can differ from a Roth IRA:

Eligibility

Life insurance doesn’t have income limitations like a Roth IRA. The income limit for a Roth IRA is subject to change annually.

Contributions

Roth IRAs also carry annual contribution limits which are also subject to change annually and can vary by the age of the plan participant. But life insurance policies can be structured to accept much more in premium dollars than a Roth IRA contribution limit. This can be helpful if you’re trying to catch up and build savings before you retire.

Volatility

Roth IRA contributions may be subject to market risk depending on the investment options you selected. If the markets are down, your Roth IRA values could go down, too. You can own permanent life insurance policies that never decrease in value and are not subject to market volatility.

Distributions

There are restrictions on when and how you can get earnings out of a Roth IRA. With life insurance cash value, you can access your available policy values when you need them, without penalty.

Next steps

This is just the start! Whether paired with or as an alternative to a Roth IRA, permanent life insurance can help provide protection, flexibility, and potential for your retirement. Talk to your financial professional to see if permanent life insurance should be part of your overall financial strategy.

Accounting for health care expenses in retirement may need to play a bigger role in your strategy than you realize. According to an estimate from Fidelity Investments¹, an average 65-year-old retired couple will need about $280,000 saved (after taxes) to cover those costs – and that estimate doesn’t include other health-related expenses like over-the-counter medications, dental care, or long-term care needs.

And, when factors like the rising costs of health care and inflation are taken into consideration, the amount you need will likely go up more the further you are from retirement.

Other factors will play a role too, like when you retire, your health, how long you live, and what government and employer benefits you’ll have access to in retirement. You’ll also need to consider what types of accounts you’ll be accessing to help cover out-of-pocket medical expenses. They may differ in how they’re taxed, and distributions may be considered income when you file taxes.

There may still be a gap

Even after private and government insurance benefits are considered, you may still find there’s a gap between the resources you’ll have and the resources you may need. And, for many of the reasons mentioned above, it will be hard to predict how large your gap may be.

Accounting for uncertainty with flexibility

A part of your solution for bridging this gap could be building up a flexible source of “just in case” assets for your retirement. That means having dedicated assets for your anticipated income and healthcare needs, and then having a separate pool of resources that can serve different purposes as your needs become clearer (or change) during retirement. A flexible planning tool to consider is permanent life insurance.

In addition to providing death benefit protection, the cash value in permanent life insurance can also help give you financial security when unexpected (or higher than expected) expenses arise during retirement.

Some policies also have the ability to add an additional rider that can accelerate the payment of the death benefit if the insured needs care for a chronic or terminal illness. This benefit can provide you with additional financial resources at a time when you may need them the most. (Read more about the roles life insurance can play in retirement.)

Coordination is key

The reality is that health care expenses are just one of the things you’re trying to plan for when it comes to retirement. You’re making a series of interconnected decisions that impact how and where you should save for the future.

The sooner you talk to a financial professional about accounting for health care costs in retirement, the more options you may have to efficiently and flexibly plan for those needs.

You can begin collecting Social Security benefits as early as age 62, but delaying until your full retirement age—or beyond—can substantially increase your lifetime payout. For most people retiring today, full retirement age ranges from 66 to 67, depending on year of birth. Even so, more than one in five eligible Americans choose to start benefits immediately at 62.¹

Unknowingly, many people reduce their lifetime benefit payments by thousands of dollars.

The do’s and don’ts for claiming benefits can be complicated. By educating yourself on your options, you’ll be better equipped to make the right decisions for you. Here are some key Social Security facts to know.

Who’s eligible for Social Security benefits?

In order to be eligible for Social Security benefits, you need to earn enough credits based on your work history. You earn credits when Social Security taxes are deducted from the income you earned working.

You need 10 years of work to qualify and they don’t need to be consecutive. If you stop working before you have enough credits to qualify, you don’t need to worry about losing the credits you’ve earned. If you begin working again, you can add any new credits to your total.

The monthly benefit you’ll receive is determined by your age when you start your benefits and your average earnings during your working years. Higher lifetime earnings generally mean higher benefits, although there is a cap.

Calculating benefits

You may be wondering how Social Security benefits are calculated. The formula uses the 35 years in your employment history in which you earned the most (adjusted for inflation and any changes in your wages during those years). If your work history is less than 35 years, the remaining years with no earnings will be factored in at zero dollars.

You can increase your benefit by replacing any zero-dollar years by working longer, even if it’s just part-time. Fortunately, no lower-earning year will replace a higher-earning year because the benefit is based on the highest-earning 35 years. If you do happen to make more money, your benefit will be increased, even if you are still working while taking your benefit.

Your benefits may also be increased annually to account for increases in cost-of-living expenses. Any increases will be based upon the Consumer Price Index for that year, a measure of the change in prices typical consumers paid for retail goods and services.

Age matters

Determining what age to begin receiving Social Security benefits is the single biggest factor that will determine the amount of benefits you receive during retirement. Generally, the longer you wait to begin payments, the larger they will be. To understand the impact of timing on Social Security benefits, consider these factors:

• Taking benefits early could mean locking in a lower benefit amount. You can collect Social Security as early as age 62, but your benefit could be permanently reduced by as much as 25% of the eligible benefit compared to if you’d waited until reaching Full Retirement Age.²
• Full Retirement Age² is the age at which you’re eligible to receive your full Social Security benefits. Waiting until this key age or even longer to start benefits can mean a larger benefit amount. It may also open up a variety of claiming strategies for married couples.
• It can pay to delay. Delaying your Social Security claim can be a huge plus. Each year you wait between Full Retirement Age and age 70, your benefit amount will increase automatically. For example, if you were born between 1943 and 1954, your benefit amount would increase by 8% annually for each year you waited between ages 66 and 70.

Marriage has advantages

While anyone may be able to increase benefits by delaying their start, married couples have several additional advantages when it comes to Social Security:

• Once a spouse starts receiving Social Security benefits (at Full Retirement Age), his or her partner can take spousal benefits, worth up to 50% of the benefit-receiving spouse’s total.
• Former spouses and surviving spouses may also be eligible to receive benefits based upon the worker’s benefit amount.

Benefits while working

If you are Full Retirement Age or older, you can continue to work and keep all your benefits, no matter how much you earn. However, if you are younger than Full Retirement Age and have started receiving Social Security benefits, there’s a limit to how much you can earn without reducing your benefits. How much your benefits are reduced³ depends on when you reach Full Retirement Age and how much you earn.

Next steps

Social Security is incredibly complex. Choosing the best time to start benefits requires a thorough understanding of your individual situation and your options.

Although you may benefit from higher annual payments by delaying your start date, for some individuals, starting benefits earlier might be preferable. For example, if one spouse had significantly higher earnings during their working years, when they retire, they may need to start receiving payments sooner to offset any lost income.

An experienced financial professional can work with you to help determine the best time for you to file for Social Security, based upon your unique situation.

For additional information regarding Social Security, or to request an updated Social Security Statement, visit www.ssa.gov.

Search online for “how much will I need for retirement?” and you’ll be flooded with results — ranging from articles with general guidance to highly detailed calculators. The estimates they’ll produce will be all over the map, too.

Why is answering this question so tough? Because no formula or rule of thumb can predict what your retirement experience will be like. To find the answer, you first have to define what retirement means to you.

It starts with a picture of retirement

By taking the time to clearly outline the retirement lifestyle you’re trying to create, it becomes easier to work backwards and identify the financial resources it will take to make that future possible.

Yes, looking at your current budget and lifestyle can be a helpful starting point, but only if your vision for retirement is similar to the life you’re living today. Consider changes such as moving to a new location with a different cost of living and taxes, which will impact the resources you’ll need.

Realistically, that picture will change over time — and the amount you’ll need to save will change with it. That may be because your own dreams for retirement evolve. Or, it could be that outside factors (like longevity and inflation) can complicate calculating what you’ll need.

Regularly reviewing your own goals for retirement with a financial professional, along with outside factors that could impact your savings approach, is crucial for keeping your strategy on track.

Think “nest eggs” instead of “nest egg”

Your financial needs in retirement will be a mix of different types of expenses — some of them predictable and recurring (like your monthly living expenses), and others less predictable in amount and frequency (think of a vacation, a large purchase, or hospital bills).
That makes trying to calculate a total savings target for retirement really tough. Instead, it might make more sense to break down your goals into different categories.

• What will you need for regular income and recurring expenses?
• What large or infrequent expenses do you need to plan for? (Vacations? Major purchases? An emergency fund?)
• What resources will you need for health– and long-term care needs? (Keeping in mind that while resources may be needed at any time, these expenses tend to escalate later in retirement)
• What goals do you have for your legacy that need to be accounted for and protected?
• Retirement calculators can also help as a starting point.

By breaking your expenses into categories, you can also more easily track the progress you’re making towards each goal, and see any gaps and shortfalls that need to be addressed.

Match the right tools to the job

Another advantage of categorizing needs is that you can better evaluate whether your assets are properly positioned. It’s not just about how much you’re saving — it’s also about where you’re saving for the future.

A hammer is great for nails, but terrible for screws. Planning for retirement is no different. Just because a product is labeled as a retirement savings tool doesn’t mean it’s capable of meeting all of your retirement needs.

Products designed to accumulate money may not be ideal for creating lifetime income, or covering medical expenses in retirement. Other products may have unique features or tax benefits that make them better equipped to solve your unique retirement challenges.

By working with a financial professional, you might discover a mismatch between the tools and strategies you’re currently using versus the goal you’re trying to achieve. And, they might be able to suggest solutions that will help your money last throughout retirement.