05/15/2026
Inflation is one of the biggest threats retirees face.
Not market volatility, headlines, or even recessions.
Inflation.
Because once you retire, the question is no longer just:
“Can I create income?”
The real question is:
“Can my income keep its purchasing power over the next 20 or 30 years?”
That’s where annuities can fall short.
Fixed annuities may provide stability, but the income can lose buying power over time.
Indexed annuities may sound like they are tied to the market, but caps, spreads, participation rates, surrender charges, and contract limits can restrict the actual growth.
Variable annuities may offer market exposure, but fees and complexity can eat into the benefit.
None of that means annuities are always bad.
They can have a role.
But retirees should be careful about treating an annuity as the entire retirement income solution.
Historically, stocks have helped investors outpace inflation.
Dimensional’s data shows that from 1928–2025, in years when inflation was above its historical median, average annual real returns were still positive:
S&P 500 Index: 4.6%
Dimensional US Small Cap Index: 7.7%
Dimensional US Small Cap Value Index: 10.8%
Real returns mean returns after inflation.
That matters.
Because retirement income planning should not just be about creating a paycheck.
It should be about creating a paycheck today while preserving purchasing power tomorrow.
For many retirees, the better answer may not be annuity or market.
It may be annuity plus market, depending on the person.
-Safety for essential income; if that's what you need.
-Growth for inflation protection; that's what EVERYONE needs.
-Discipline so neither fear nor salesmanship drives the decision.
Retirement income should be designed around your life, not sold around a product.
If you’re nearing retirement, ask a better question:
“What income plan gives me the best chance to live well for the rest of my life?”
