People sometimes ask us: "Should I buy an annuity or just rely on Social Security?"
Wrong framing. That's like asking "Should I have a foundation or walls?" You need both.
Social Security is the base layer of retirement income. A life annuity is the second layer. Put them together and you have something that looks a lot like the pensions our parents had — a guaranteed monthly check that covers your bills whether you live to 75 or 105.
The real question isn't annuity vs Social Security. It's how to combine them so you never have an income gap.
The Gap Nobody Plans For
The average Social Security retired-worker benefit in 2026 is approximately $2,100 per month ($2,085.98 per SSA's Monthly Statistical Snapshot, July 2026). For a couple where both spouses worked, the combined figure is typically $3,200 to $3,800.
The average retiree household spends $4,500 to $5,000 a month.
That math doesn't work.
| Single Retiree | Couple | |
|---|---|---|
| Average Social Security | $2,100/month | $3,500/month |
| Typical monthly expenses | $3,800/month | $5,000/month |
| Monthly income gap | $1,700 | $1,500 |
| Annual income gap | $20,400 | $18,000 |
For a single retiree, that's more than $20,000 a year that has to come from somewhere. For a couple, $18,000. Every year, for the rest of your life.
Where does it come from? For most people without a pension, the answer is 401(k) withdrawals, savings drawdowns, or part-time work. All of those can run out. A life annuity cannot.
What $200,000 Does to the Gap
Let's fill that gap with numbers from our rate tables. Here's what a $200,000 SPIA pays at different ages in October 2026. Each figure is the best of the 8 carriers we publish, for a single life (or a joint contract that pays 100% to the survivor, both spouses the same age) with a 5-year period certain. We scale our per-$100,000 figures in proportion to $200,000, so a real quote at that premium can differ a little:
| Age | Monthly Income (Male) | Monthly Income (Female) | Monthly Income (Joint & Survivor) |
|---|---|---|---|
| 60 | $1,298 | $1,268 | $1,170 |
| 65 | $1,386 | $1,316 | $1,216 |
| 70 | $1,534 | $1,448 | $1,318 |
| 75 | $1,786 | $1,678 | $1,462 |
Source: LifeAnnuities.us quote surveys run for real clients. The figures start from quotes our agent runs for real clients, not advertised rates or illustrations. For the base tables we received 54 survey runs covering 30 client scenarios, prepared July 14 to September 14, 2026, and used 52 of them for pricing (2 runs used annual payments and were left out of pricing). 17 carriers were quoted. On we checked the tables against 7 new survey runs (4 client scenarios, prepared September 18 to 29, 2026). 11 runs were received and 4 were not used (4 runs were for a 41-year-old, well below our table ages; two of them were at $5,000,000). We repriced 1 of the 8 carriers we publish (Athene, up about 1.8%) and held the other 7 at their earlier figures. A repriced carrier has its whole table moved by its own measured change on quotes for the same age and sex. New York Life: readings were mixed, so we held its figures until the next round. Two direct comparisons with mid-September quotes came in 0.7% and 1.6% higher once premium size is allowed for. A third, measured through August, came in 0.6% lower. How each figure is built. Men: 60, 65 and 80 read at surveyed ages; 55, 70 and 75 interpolated between surveyed ages. Women: all ages derived by ratio. Joint: 55, 60, 75 and 80 derived by ratio; 65 and 70 calibrated to a direct same-age joint quote. None of the figures in our tables is a direct quote from the latest survey round. They are built from earlier rounds (read at surveyed ages, interpolated or derived from carrier ratios) and checked carrier by carrier against the latest one. Joint figures at ages 65 and 70 are calibrated to a direct joint quote (same-age joint quote, both spouses 66, 100% to the survivor, 5-year period certain, prepared September 18, 2026). That corrects an estimate. It is not a market move. Basis: single life or joint (100% to survivor), 5-year period certain, income starting next month, per $100,000. Full method and known limits. Free to cite with attribution to LifeAnnuities.us.
A 65-year-old man puts $200,000 into a SPIA. He gets $1,386 per month. Add that to his $2,100 Social Security and he's at $3,486, which covers most of his $3,800 expenses. The remaining $314 is manageable from modest savings.
A 65-year-old couple with combined Social Security of $3,500 puts $200,000 into a joint-and-survivor SPIA. They add $1,216 per month. Total guaranteed income: $4,716. That closes most of their gap and leaves about $284 a month of the $5,000 budget to come from savings. Both spouses protected for life. See our joint rate tables for the 8 carriers we publish.
How Social Security and Annuities Are Different
They're both guaranteed income for life. But the similarities end there.
| Social Security | Life Annuity | |
|---|---|---|
| Who provides it | Federal government | Private insurance carrier |
| How you earn it | 35+ years of payroll taxes | One lump sum purchase |
| Inflation adjustment | Yes — annual COLA | Typically no — fixed payments |
| Can you increase it? | Only by delaying or earning more | Yes — invest more, get more |
| Spouse coverage | Survivor gets higher of two benefits | Joint & survivor option available |
| Starts when? | Age 62–70 | Whenever you buy |
| Amount | Based on earnings history | Based on how much you invest |
| Fees | Payroll taxes funded it | Zero annual fees (SPIA) |
Social Security's biggest advantage is the COLA. Your benefit rises with inflation. A fixed annuity doesn't. But the annuity's biggest advantage is flexibility — you decide how much income to create. Social Security gives you what it gives you.
Three Ways to Use Them Together
Strategy 1: Fill the Gap
The simplest approach. Start Social Security at your full retirement age (67 for most people), then buy a SPIA to cover whatever expenses Social Security doesn't. This is what many of our clients do.
Combined guaranteed income covers your essentials. Remaining savings stay invested for growth and flexibility. Clean and effective.
Strategy 2: Bridge Income While You Delay Social Security
Delaying Social Security from 62 to 70 increases your benefit by roughly 77%. That's the single best "guaranteed return" available in personal finance. But you need income during the delay.
Buy a SPIA at 62 that covers your expenses for the next 8 years. When Social Security kicks in at 70 with the maximum benefit, the annuity income becomes supplemental — bonus money on top of a much larger SS check. If you want the check to stop the month Social Security starts, the bridge SPIA guide explains the period-certain version.
This strategy maximizes your total lifetime guaranteed income. It works best if you're healthy and expect to live past 80 (when the higher SS benefit overtakes the lower one).
Strategy 3: Longevity insurance with a second SPIA
Keep a reserve invested and buy a second immediate annuity at 75 or 80, when payout rates are far higher. In our rate tables as of , the best figure per $100,000 (single life, 5-year period certain) is $893 a month for a 75-year-old man and $1,046 for an 80-year-old, versus $693 at 65. A deferred income annuity (DIA) packages the same idea into one contract bought today; it pays nothing for years and is irrevocable, and we do not quote them.
The Pension Math
Here's another way to think about it. In 1980, about 38% of private-sector workers had a traditional pension. Today it's under 15% and falling.
A pension did exactly two things: guaranteed income, for life. Social Security does the first half. A life annuity does the second half. Together, they reconstruct what an entire generation took for granted.
If your parents retired with a pension plus Social Security, they never worried about the stock market. They never wondered if their money would last. They got two checks every month and lived their lives.
You can build the same thing. Social Security is already in place. The annuity is the piece you buy yourself.
Tax Implications of Combining Both
This matters and most articles skip it. Adding annuity income on top of Social Security can push more of your SS benefits into taxable territory.
For a single filer, if your combined income exceeds $34,000, up to 85% of your Social Security becomes taxable. For married filing jointly, the threshold is $44,000. Annuity income counts toward combined income, so the interaction is real.
Two things reduce the impact:
- Fund the annuity with after-tax money if possible. Non-qualified annuities benefit from the exclusion ratio — only the earnings portion counts as income. This keeps your combined income lower than a fully-taxable IRA-funded annuity would.
- Plan the amounts deliberately. We help clients size their annuity purchase to stay near the tax thresholds rather than blowing past them. Sometimes a slightly smaller annuity saves enough in taxes to make it the better financial move overall.
For the complete tax picture, see our annuity tax guide. For how annuity income enters the benefit tax formula, the Medicare premium surcharge and SSI, with a worked $100,000 example, see does an annuity affect Social Security benefits.
What If Social Security Gets Cut?
The Social Security trust fund faces a funding shortfall. Without congressional action, benefits could be reduced by roughly 20–25% starting in the mid-2030s. Will Congress let that happen? Probably not — it would be political suicide. But "probably" isn't "definitely."
Having a life annuity as your second income layer means you're not 100% dependent on a government program. Even if Social Security benefits are trimmed, your annuity payments continue unchanged. The carrier's obligation is contractual. It doesn't depend on congressional votes or trust fund solvency.
We don't say this to scare anyone. We say it because diversifying your guaranteed income sources is just common sense.
Your Numbers
The gap between Social Security and your actual expenses is a specific, calculable number. So is the annuity payment that fills it.
Our calculator shows you both in about 30 seconds. Enter your age, your investment amount, and see exactly what your second income layer would look like. Or request a personalized SPIA quote — we'll run rates across every A-rated carrier and send you a side-by-side comparison. You can also call us at 800-747-4201. No cost, no obligation.
Social Security is the floor. A life annuity is the ceiling. Between the two of them, your retirement income is handled.
