Little-Known Ways to Guard Your Retirement Income

Four piggy banks lined up, one of which is covered with a glass dome.

(Image credit: Getty Images)

published 8 April 2025

We all know the current headlines about the stock market, but did you know there are ways to exercise caution with how much you’re invested in the stock market?

Whether in retirement or a few years away, your money has less time to recover during a severe market decline, which could significantly lessen your retirement funding. Stacking most of your money in stocks leaves you with too much overall risk.

While growing your retirement savings is important, protecting it is paramount when you’re no longer employed. Being overly invested in stocks makes one vulnerable to fear-based trading when the market tanks.

From just $107.88 $24.99 for Kiplinger Personal Finance

Be a smarter, better informed investor.

CLICK FOR FREE ISSUE

https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-200-80.png

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

As they say, the stock market is the only store where when things go on sale, everyone runs out the door.

We’ve seen devastating market dips during so-called black swan events, such as the dot-com crash, the 2007-08 financial crisis and the 2020 stock market crash that was triggered by COVID-19. Expensive lessons such as those should inform future money decisions, particularly regarding funding one’s retirement.

Remember, stock dividends pay only quarterly, whereas most retirees’ bills are monthly. Therefore, generating some types of normalized monthly income streams is vital to one’s financial retirement plan.

People can avoid financial calamity from market losses by diversifying in different asset classes and in some alternatives available now that weren’t around 20 or 30 years ago. Diversifying can make the difference in saving hundreds of thousands of dollars over one’s retirement.

Here are some options you can add to your portfolio that provide income in retirement while lessening your market exposure:

Fixed index annuities with guaranteed income riders

A fixed index annuity is an insurance contract in which payments are based on the performance of a stock market index, such as the S&P 500. You’re protected against most losses, but the annuity will most likely limit your potential gains as well.

Assets grow tax-deferred, and for an additional cost, there’s an optional guaranteed lifetime withdrawal benefit.

Many people like fixed index annuities because they have no market risk to the downside while giving clients upside potential.

What has made them popular in recent years are the guaranteed income riders, which are contract benefits designed to guarantee a specified amount of income for life, no matter how interest rates change or potential market crashes loom throughout your retirement.

These riders are represented as a percentage. A guaranteed income rider on a fixed index annuity provides a guaranteed lifetime income stream while allowing the policyholder to maintain access to their account value.

Depending on the term, there may be surrender charges on amounts above the penalty-free amounts.

Fixed annuities

Fixed annuities are the equivalent of a bank certificate of deposit, or CD. They’re appealing during a period when interest rates are most likely to go down. They can help you accumulate funds for retirement without exposing your hard-earned money to market risk.

Fixed annuities are issued by insurance companies and usually have longer durations than CDs. Instead of a six- or 12-month CD, you can have a fixed interest rate of return locked in for three, five, seven or sometimes even 10 years.

When it’s a rising interest rate environment, it’s usually better to go the CD route, because you can take advantage of getting a higher yield when the CD comes due.

Registered index-linked annuities (RILA)

A RILA is a deferred annuity that combines some elements of the fixed index annuity and variable annuity. RILAs have become popular in recent years because they have limited downside risk and offer investment growth.

A RILA potential for bigger returns than a fixed index annuity, but it is riskier; a fixed index annuity typically has a minimum return guarantee.

Instead of buffering all the market exposure, RILAs usually buffer about 20% market loss. The insurance or annuity company will eat the first 20% of losses and still offer high participation rates while still shielding downside market exposure.

Real estate investment trusts (REITs)

REITs are pools of real estate owned by companies. They operate multiple properties or finance multiple income-producing real estate properties to mitigate risk, which may allow you to earn income without having to buy, manage or finance the properties.

REITs have the potential to generate a tax-efficient income while limiting market exposure. Most REITs lease space, collect rent and distribute the income as dividends to shareholders.

REITs are usually best held in after-tax accounts because the majority of the income may have special tax treatment that you can’t take advantage of in an IRA or 401(k). That allows you to generate an even greater tax equivalent yield.

Better to diversify than do nothing

Sometimes it seems easier just to stay on the retirement planning path you’ve been on because of familiarity, convenience and an investment history that’s had few hiccups.

It may seem like too much work to make a big change in your portfolio when things are going relatively well.

But if your situation is shifting from the accumulation stage to the distribution stage, it might be time to consider more diversification in your portfolio and, with it, more protection from more market dips.

The stock market, as high as it has risen in recent decades, is unpredictable. Recent history has shown that black swans do swoop in.

But there are products out there that can generate steady income while reducing market risk and increasing your confidence in your retirement plan.

Dan Dunkin contributed to this article.

The views and opinions expressed are for educational purposes only and are not intended to be a recommendation or investment advice. Any guarantees offered by an annuity are backed by the financial strength and claims-paying ability of the issuing insurance company. Centaurus Financial Inc. and Cornell Asset Management are not affiliated companies.

Securities and advisory services offered through Centaurus Financial Inc., member FINRA/SIPC, a registered investment adviser. This is not an offer to sell securities, which may be done only after proper delivery of a prospectus and client suitability is reviewed and determined. Information relating to securities is intended for use by individuals residing in FL, NC, SC, GA, MA, NH, NJ, NY, OH, PA, RI, VA, WI, AR, CA, IL, KY.

Appearances on Kiplinger.com were obtained through a paid public relations program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

TOPICS

Jacob Cornell is a financial adviser at Cornell Asset Management. He’s a third-generation financial adviser whose father was vice president of Morgan Stanley in Sarasota, Fla. Cornell can offer investment and insurance products and services while helping people navigate their finances throughout retirement. He leads informational classes at the State College of Florida, Manatee-Sarasota, and Florida Southwestern State College.