Feeling Ready Isn't the Same as Being Ready for Retirement

Three years of strong market returns can make someone planning for retirement feel like the goal is within reach. However, a growing account balance doesn't automatically translate into a stream of reliable income that will be needed to cover decades of living expenses.

A recent BlackRock study found that 68% of 60+ year olds believe they are on track for retirement.¹ Yet their workplace retirement savings are projected to generate only 50% to 60% of the income they expected to need—a consequential gap for a retirement that could last 30 years or more.

So, what is the best way forward? The standard advice is to save more, but mortgages, student loans, childcare costs, aging parents, and other real-life demands can make that difficult. Fortunately, saving more is not the only path to having more retirement income when you need it. Another option is to create a personal pension: a stream of income you can’t outlive, funded by a modern, low-cost annuity.

Prepare to Fund More of Retirement on Your Own

For decades, Americans drew retirement income from three sources: an employer pension, Social Security, and personal savings. That structure hasn’t disappeared, but the weight each source carries has shifted—and more of it now falls on you.

• Employer Pension Plans: These once provided steady lifetime income for generations of Americans. Today, traditional pension plans are rare. Instead, companies offer 401(k)s and similar workplace plans that shift the primary responsibility for turning accumulated assets into retirement income to individuals.
• Social Security Benefits: These have traditionally provided predictable monthly income checks that can be used to fund retirement. Yet the long-term future of Social Security is uncertain. Since 2021, the program has paid out more than it has taken in, and the retirement trust fund, or OASI, is projected to be depleted by 2032, according to the Social Security Trustees' 2026 report. At that time, benefits are projected to fall to about 78% of previous levels, potentially leaving Americans with less coming in each month, and an income gap to fill from other sources.²
• Personal Savings and Investments: These were meant to supplement income from pensions and Social Security benefits. Now, these assets may become a primary source for retirement income. It’s a daunting prospect at a time when many people say they are struggling to save enough because of healthcare costs, persistent inflation, debt obligations, and other competing financial priorities.³

Turning Savings into a Paycheck: How Much Will You Need?

During working years, Americans often build their household budgets around their paychecks. Once retirement begins, the loss of a regular paycheck can trigger a period of financial and psychological adjustment. Turning an investment portfolio into a predictable retirement paycheck can be difficult. Annual withdrawals may work—but only if several factors align:

• Sufficient savings
• Favorable market conditions
• Well-timed withdrawals
• Minimized taxes

None of these are guaranteed.

A personal pension using an annuity offers another approach: predictable monthly income to cover essential retirement expenses. To estimate the income you need, review your current spending and identify which costs will continue, decrease, or disappear after you stop working.

For example, if your home mortgage is paid off by the time you retire, that expense will be eliminated. However, you will still need to budget for home maintenance, insurance, and property taxes. Similarly, you may own your vehicle when you retire. While this means no monthly loan payments, you will still need to budget for insurance, fuel, and maintenance.

A hypothetical annual budget for a retired couple’s essentials might include:

• Housing = $15,600 (utilities, maintenance, insurance, property taxes for an owned home valued at $550,000)
• Food = $14,000 (groceries and dining out)
• Transportation = $8,000 (fuel, insurance, property taxes, and maintenance for two owned cars)
• Healthcare = $13,400 (Medicare and supplemental insurance premiums, out-of-pocket costs)

In this example, the estimated annual budget for essentials totals $51,000.⁴ Sustaining that spending for 30 years or more—before accounting for inflation—shows the scale of the retirement-income challenge. Social Security will cover part of that, but a stream of guaranteed lifetime income from annuity can help fill the remaining income gap.

Building Your Personal Pension with Modern Annuities

Creating a dependable personal pension is straightforward—it simply requires the right solution to turn your savings into a stream of income—similar to Social Security or a traditional pension. This is where annuities—particularly the newer generation of commission-free annuities—can play a critical role.

Annuities are insurance products that are designed to turn an amount of money (called the premium or purchase payment) into a contractually guaranteed stream of income for retirement. Historically, some investors avoided annuities because of concerns about high costs and product complexity. However, the annuity market has evolved over the last several years and a new generation of lower cost, simplified products is now available.

Today, leading insurance companies offer annuities that are “commission-free”, meaning they are built without sales commissions embedded into the product pricing. Removing commissions can reduce costs and improve the value of the benefits the annuity can provide in comparison to their traditional commissioned counterparts.

Commission-free annuities are available through fee-only financial advisors and also directly through platforms like DPL.

What’s Next? Feel Ready, and Be Ready with a Personal Pension

In a second BlackRock survey of annuity owners, 97% said they are less worried about running out of money in retirement, and 93% said they are less concerned about meeting day-to-day expenses.⁵

Survey respondents said the three reasons they purchased an annuity include:

• Peace of mind that savings would not run out
• More assurance that essential expenses would be covered for life
• Extra protection in case they live

Traditional pensions provide these three benefits automatically, as a structural feature of the plan. With an annuity, it’s possible to replicate these benefits through an income annuity you purchase directly.

Feeling ready for retirement isn’t the problem. The problem is feeling ready without an income strategy to support it. An annuity-funded personal pension can deliver lifetime income to fund essential expenses and give you the ultimate gift in retirement: peace of mind you’ll be covered. You’ve earned that.

Disclosures:

¹ BlackRock, “2026 Read on Retirement: A New Era of Retirement,” June 2026.

² Social Security Administration, “Status of the Social Security and Medicare Programs,” February 2026.

³ National Institute on Retirement Security, “Retirement Insecurity 2026: Americans’ Views of Retirement,” August 2026.

⁴ DPL Financial Partners, Illustrative estimate of retirement expenses for a couple (Male - Age 70, Female - Age 68) in Louisville, KY.

⁵ BlackRock Retirement Perspectives, “Annuity Owners Value the Benefits of Lifetime Income,” June 2026.

This material is provided for educational purposes only and does not constitute investment, legal, tax, or insurance advice. It should not be relied upon as a recommendation to purchase, sell, or exchange any security or insurance product. Investors should consult with their financial, tax, and legal professionals before making financial decisions.

Annuities are insurance products issued by insurance companies. Guarantees are subject to the claims-paying ability and financial strength of the issuing insurer. Product features, limitations, fees, surrender charges, and availability vary by contract and carrier.

Past performance is not indicative of future results. No investment strategy can guarantee a profit, achieve its objectives, or protect against loss in all market conditions.