Calculate what portion of your essential monthly expenses you can cover with your current retirement plan and if you have a gap that you still need to plan for.
In under a minute, you will see how much of your essentials are covered for life, the monthly gap that is left, and what it would take to close it.
Your retirement income floor is the income you can count on for life, regardless of market fluctuations. It usually comes from Social Security, a pension and/or an income from a lifetime annuity. When your floor covers your essential bills, a rough year in the market changes your travel plans and not your ability to pay the mortgage or buy groceries.
Using the financial floor strategy means to cover your essential, must-pay expenses with guaranteed income, then invest the rest however you like. You do not have to guarantee every dollar, only the amount you cannot afford to lose. Many people build their floor in the same order: Social Security first, then any pension, then a lifetime income annuity to cover whatever gap is left.
Your monthly gap is simply your essential expenses minus your guaranteed income. To show the bigger picture, we multiply that gap by 12 months and by the number of years you plan for. For example, a $1,300 monthly gap from age 65 to 90 adds up to about $390,000 over those 25 years. This is not a quote, and it does not assume any investment return, inflation, or particular product. It just shows the size of the gap in real dollars, so you can see what you are working with.
If the calculator shows a gap, you have a few ways to close it. Many retirees use a mix of the options below, depending on when they need the income and how much flexibility they want to keep.
Add guaranteed lifetime income. A single premium immediate annuity (SPIA) turns a lump sum into income that starts right away and lasts as long as you live. A fixed indexed annuity with a lifetime income rider can start later, may grow over time, and is not credited with losses when the index falls. Both are designed to pay income for life. Those payments are contractual obligations of the issuing insurance company and depend on its claims-paying ability. Rider-based income carries its own fee, and withdrawing more than the contract allows can reduce or end the income benefit.
Delay Social Security. Every year you wait past your full retirement age, up to age 70, raises your benefit for life. Social Security is adjusted for inflation most years, which makes delaying one of the lower-cost ways to lift your floor. Benefits are set by federal law and can be changed by Congress. The tradeoff is that you go longer before your first check arrives.
Right-size your essentials. Sometimes the fastest win is lowering the bill itself. Paying off a mortgage, refinancing, or trimming a recurring cost shrinks the gap your guaranteed income has to cover.
A HiWire specialist can help you figure out whether an annuity is the right way to close your gap, with quotes from 44+ carriers and no pressure to buy.
Talk with an ExpertWhat counts as guaranteed income?
Guaranteed income is money that keeps coming for life, because it is not tied to market performance. That includes Social Security, most pensions, and lifetime income from an annuity contract. Withdrawals from a 401(k) or IRA do not count, because they depend on your balance and how the market performs.
How much of my expenses should be guaranteed?
There is no single right answer. Many retirement researchers suggest covering most or all of your essential, must-pay expenses with income you can count on, then funding the flexible, fun spending from your investments. The right level depends on your situation, and some people choose to cover more for extra peace of mind.
How is the total I will need calculated?
It is your monthly gap times 12 months times the number of years you plan for. For example, a $1,300 monthly gap over 25 years is about $390,000. It does not include investment growth or inflation. It is a simple picture of the total shortfall over your retirement.
Is this a quote?
No. It is an educational estimate, not a quote. A licensed HiWire specialist can give you current, personalized numbers for your situation.
This calculator is a hypothetical illustration for educational purposes only. It is not a quote, prediction, or guarantee. The total shown is your monthly income gap multiplied by the number of years you choose to plan for. It does not assume any investment return, inflation, or specific product, and your actual needs will vary. Annuity guarantees are subject to the claims-paying ability of the issuing insurance company. Annuities may carry fees, rider charges, and surrender charges, and product features and availability vary by state. Withdrawals are generally taxed as ordinary income and may be subject to an additional 10% federal penalty before age 59½. HiWire Financial is a licensed insurance agency and does not provide financial, tax, or legal advice. Please talk with a licensed professional about your own situation before making decisions.
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