If you’re feeling left out because you don’t have a pension, you’re far from alone. Only 22% of workers are covered by a pension these days, according to the Federal Reserve. But if you want to have an additional stream of steady income in retirement to supplement your Social Security benefits, you could create one using an insurance contract known as an annuity.
“An annuity is like a personal pension,” says David Blanchett, head of retirement research for PGIM DC Solutions, the investment management division of Prudential. You transfer part of your savings to an insurance company, which then turns that money into future income payments. You can set up an annuity that provides guaranteed income for the rest of your life, like a pension. “No matter how long you live or what happens in the market, you’ll get some benefit.”
