Why Annuities Are the Best Pension Replacement for Today’s Retirees
Annuities vs. Pensions: Many retirees are discovering a major gap in their retirement strategy, being the absence of a traditional pension. As companies move away from defined benefit plans, individuals are left to figure out how to create their own consistent, reliable retirement income. That’s where annuities come in.
Why Today’s Retirees Need a Pension Replacement
With longer life expectancy and increased market uncertainty, relying solely on Social Security or 401(k) distributions can feel risky. Annuities provide guaranteed income for life, similar to a pension—without the worry of running out of money.
How Annuities Mimic Pension-Like Security
Certain annuities, especially those with lifetime income riders, offer consistent monthly payouts you can never outlive. They give you the ability to turn a portion of your retirement savings into a stream of predictable income, no matter what happens in the markets.
Who Should Consider Annuities for Pension Replacement?
If you’re approaching retirement without a pension and want guaranteed monthly income that lasts as long as you do, an annuity might be the missing piece. Retirement accounts like 401(k)s or IRAs can often be rolled into an annuity, allowing you to secure guaranteed income using your existing savings.
A Family Approach to Planning
At Diversified Insurance Brokers, we specialize in creating pension-like income using the right annuity strategies. We also partner with Diversified College Planning to help families plan across generations—ensuring that while you secure your retirement, your children or grandchildren receive expert college funding advice.
Visit our annuity rate page here to explore competitive options tailored to your goals.
Contact Us Today: Want to replace your missing pension with guaranteed income?
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Contact Us Today:
Ready to explore insurance and annuity options that offer guaranteed income, principal protection, disability, life insurance, Social Security and Medicare reviews, and long-term financial growth? Let the expert advisors at Diversified Insurance Brokers help you find the right strategy for your retirement goals.
📞 Call us at 800-533-5969
🔗 Visit our annuity rate page here
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FAQs: Annuities vs Pensions
What is the main difference between an annuity and a pension?
A pension is an employer-sponsored lifetime income benefit, while an annuity is a contract you purchase from an insurance company to create guaranteed income. Pensions are provided to you; annuities are chosen by you.
Can an annuity replace a pension?
Yes. Many retirees use annuities to replicate a pension-like income stream, especially when their employer does not offer a traditional pension.
Do pensions always provide lifetime income?
Most defined-benefit pensions pay income for life, but some plans offer lump-sum payouts or specific period options depending on the plan structure.
Which provides more flexibility: annuities or pensions?
Annuities typically offer more flexibility. You control the carrier, the income options, the timeline, and optional riders. Pensions follow a fixed formula set by your employer.
Are annuity payouts guaranteed like pension payouts?
Both are guaranteed, but the source is different. Pensions are backed by the employer or pension fund; annuities are backed by the financial strength of the insurer issuing the contract.
Is pension income taxable?
Yes. Pension income is generally taxed as ordinary income. Annuity income may also be taxable, depending on whether the money used to purchase the annuity was qualified or non-qualified.
Can you convert a pension to an annuity?
In many cases, yes. Some pensions offer lump-sum payouts that retirees can place into an annuity to create a personalized income plan.
Why do some retirees prefer annuities over pensions?
Annuities can provide higher income potential, customization options, inflation adjustments, and control over beneficiary benefits. Pensions often limit these choices.
What happens to my pension when I die?
Most pensions reduce or stop payments unless you selected a joint or survivor option. Annuities often provide more flexible legacy options, including refund features or guaranteed periods.
Which option is best for long-term retirement planning?
It depends on your goals. Pensions offer simplicity and lifetime income; annuities offer guaranteed income plus flexibility, customization, and control over benefits.
About the Author:
Jason Stolz, CLTC, CRPC, is a senior insurance and retirement professional with more than two decades of real-world experience helping individuals, families, and business owners protect their income, assets, and long-term financial stability. As a long-time partner of the nationally licensed independent agency Diversified Insurance Brokers, Jason provides trusted guidance across multiple specialties—including fixed and indexed annuities, long-term care planning, personal and business disability insurance, life insurance solutions, and short-term health coverage. Diversified Insurance Brokers maintains active contracts with over 100 highly rated insurance carriers, ensuring clients have access to a broad and competitive marketplace.
His practical, education-first approach has earned recognition in publications such as VoyageATL, highlighting his commitment to financial clarity and client-focused planning. Drawing on deep product knowledge and years of hands-on field experience, Jason helps clients evaluate carriers, compare strategies, and build retirement and protection plans that are both secure and cost-efficient.
