The U.S. stock market has delivered extraordinary returns over the past few years. After back-to-back gains exceeding 20% in 2023 and 2024—a feat not seen since the late 1990s—the S&P 500 has notched more than 50 new all-time highs, with much of the rally driven by artificial intelligence and the “Magnificent Seven” tech stocks.
But storm clouds are gathering. Market concentration has reached levels not seen since the dot-com bubble, with AI-related companies accounting for approximately 75% of S&P 500 returns since ChatGPT launched in 2022. Major institutions including the Bank of England, the International Monetary Fund, and JPMorgan Chase CEO Jamie Dimon have issued warnings about potential corrections driven by stretched valuations.
Valuations now sit at levels historically seen only twice—during the tech bubble of the 2000s and at the COVID-19 pandemic peak in 2020. The forward price-to-earnings ratio exceeds 22 times, a metric that has preceded significant market corrections. Dimon stated bluntly that while “AI is real,” some money being invested now will “probably” be wasted, and he sees a higher chance of a meaningful drop in the next six months to two years than the market is pricing in.
The Retirement Security Crisis
Here’s the uncomfortable truth: the traditional retirement system has collapsed. In 1975, nearly 30% of the U.S. workforce enjoyed pension coverage. Today, that’s plummeted to 13.5%—only 12 million Americans. Meanwhile, over 85 million workers now participate in 401(k)s, where all investment and longevity risk has shifted from employers to individuals.
The three-legged stool of retirement—pensions, personal savings, and Social Security—is broken. Social Security’s trust fund is projected to be depleted by 2033, potentially resulting in benefit cuts of 20-25%. And people are living longer: a record 4.2 million Americans reached age 65 in 2025 alone. Over half of seniors worry their savings won’t last, with 77% relying on Social Security and 19% stating it’s their only retirement plan.
The 401(k) Problem
The 401(k) system has two critical flaws:
Access is limited. You can only participate if your employer offers one, and millions of workers have no access to employer-sponsored retirement plans.
Market dependence. When you retire matters as much as how much you’ve saved. If you retire just before a correction—what professionals call “sequence of returns risk”—you could be forced to sell at depressed prices, permanently reducing your portfolio’s recovery potential. A retiree experiencing a 20% decline in year one faces permanently reduced capital compared to someone experiencing that decline in year ten.
Enter the Guaranteed Personal Pension
This is where our firm’s “Guaranteed Personal Pension” strategy becomes essential.
Think about how major corporations manage finances. They don’t put everything in the market and hope for the best. They use guarantees, predictable cash flows, and risk management. Why shouldn’t you do the same with ensuring you don’t outlive your money?
A Guaranteed Personal Pension is a strategic allocation of retirement assets into an annuity with a AAA-rated insurance company—creating a floor of guaranteed income that you cannot outlive, regardless of market performance.
How It Works and Why It’s Powerful
At a certain stage—whether at retirement, approaching it, or even in your 40s or 50s if you’re planning ahead—you take a portion of investable assets (from your 401(k), IRA, or taxable accounts) and convert them into a guaranteed income stream.
Unlike accounts that fluctuate with markets, an annuity with a top-rated insurance company provides:
- Guaranteed Lifetime Income that continues even if you outlive your investment
- Predictable Cash Flow for easier budgeting
- Market Protection that doesn’t decrease when stocks fall
- Spousal Protection options ensuring both partners are covered
- Period Certain Options guaranteeing payments for minimum periods to protect heirs
The “Too Big to Fail” Advantage: When you purchase from a AAA-rated insurer, you’re backed by companies too integral to the financial system to be allowed to fail—plus state insurance guaranty associations provide additional protection. This is fundamentally different from market investments where companies can go bankrupt or sectors can crater.
A Practical Example
Imagine you’re 62 with $800,000 in retirement savings. Your essential expenses total $4,000 monthly ($48,000 yearly). Social Security provides $2,000 monthly, leaving a $2,000 gap.
Rather than hoping your portfolio generates sufficient returns for 30+ years while exposed to sequence risk, you could:
- Allocate $400,000 to a guaranteed income annuity providing $2,000 monthly for life
- Your essential expenses are now completely covered regardless of market performance
- The remaining $400,000 stays invested for growth, discretionary spending, and legacy goals
If the market crashes 30% next year, your essential lifestyle doesn’t change—you still receive your $2,000 monthly plus Social Security. This separates essential needs from market volatility.
Not Just for Retirees: Protecting Your Gains
If you’re in your 40s or 50s and have seen significant investment gains during this bull market—perhaps your portfolio grew from $500,000 to $750,000 or $1 million to $1.5 million—this strategy offers a way to lock in those gains as guaranteed future income.
Why This Makes Sense for Younger Investors:
Locking In Gains at Market Highs: When markets are up significantly, it’s an ideal time to de-risk a portion of your portfolio, converting extraordinary gains into guaranteed future income.
Deferred Income Annuities Offer Powerful Benefits: A 50-year-old investing $200,000 today into a deferred income annuity starting at 65 might receive $2,000-$2,500+ monthly for life starting at 65. That’s $24,000-$30,000+ yearly in guaranteed income, regardless of what happens over the next 15 years.
Tax-Advantaged Compounding: Money in annuities grows tax-deferred. You pay taxes when you receive income, likely in a lower bracket, while allowing full compounding without annual taxation drag.
Protection Against Future Panic: Will you maintain discipline if the market crashes 40% five years before retirement? By allocating some gains to guaranteed income now, you protect yourself from future emotional decisions.
Creates a “Risk Budget”: When meaningful retirement income is guaranteed, you can be more aggressive with remaining assets. If $300,000 generates $2,500 monthly starting at retirement ($30,000/year locked in), your remaining $700,000 can stay more aggressively invested.
A Younger Investor Example:
You’re 48 with $800,000 in retirement accounts. You’re still earning and contributing, so you don’t need this money for 15-20 years.
Strategy:
- Take $200,000-$300,000 (representing recent gains)
- Convert to a deferred income annuity starting at 65
- Generate approximately $2,000-$3,000+ monthly in guaranteed lifetime income starting at 65
At 65, you’ll have:
- $24,000-$36,000+ yearly in guaranteed income you cannot outlive
- Combined with Social Security: $50,000-$60,000+ in guaranteed annual income
- Your remaining portfolio provides additional resources for discretionary spending, inflation protection, and legacy goals
What Income Could Your Money Generate?
This depends on:
- Your current age (younger = more deferral time = higher payments)
- Amount invested (larger investments = larger income streams)
- When you want income to start (longer deferral = higher payments)
- Type of annuity selected (different products offer different features)
- Current interest rate environment (today’s rates are attractive)
At Beacon Financial Pathways, we run specific illustrations showing exactly what guaranteed income your assets could generate—actual quotes from AAA-rated carriers, not generic estimates.
Why Now?
The current environment creates a unique opportunity:
- Market valuations are stretched with elevated correction risk
- Annuity rates are attractive (5-6%+ range)
- You likely have gains to protect from the recent bull market
- Market uncertainty is elevated, making guarantees more valuable
- Social Security faces cuts within eight years without congressional action
- Time is on your side if you’re younger—deferral periods significantly enhance income
Even if you don’t move forward today, understanding what guaranteed income your money could generate provides crucial context for all financial decisions—the true “opportunity cost” of staying 100% exposed to market risk.
Addressing Common Concerns
“What if I die early?” Period certain options and return of premium riders ensure heirs receive value. But consider: would you rather “lose” because you died early (meaning you didn’t need that income anyway), or outlive your savings and face hardship in your 80s and 90s? Insurance is always a trade-off for peace of mind.
“Aren’t fees high?” Simple immediate or deferred income annuities typically have no annual fees—the insurance company profits by investing your premium and paying you a portion back. Variable and indexed annuities may have additional fees, which is why working with a fiduciary advisor is essential.
“I’ll lose access to my money.” Partially true, which is why we emphasize using only a portion of your assets. The allocated money converts to income, like a pension. You maintain flexibility and access with remaining assets.
It’s About Balance, Not All-or-Nothing
We’re not suggesting converting your entire portfolio to annuities—that eliminates growth potential and flexibility. The Guaranteed Personal Pension creates a foundation covering essential expenses with guaranteed income, while maintaining liquidity and growth potential with remaining assets.
Think of building a house. The annuity is your foundation—solid, reliable, permanent. Your investment portfolio is the rest—where you have flexibility to renovate, expand, and adapt.
The Bottom Line
Whether you’re approaching retirement, already retired, or in your peak earning years with significant gains, the combination of stretched valuations, longevity risk, and disappeared pensions makes this strategy more relevant than ever.
Ask yourself:
- Can I afford a 20-30% market decline early in retirement?
- Am I confident my savings will last if I live to 95 or 100?
- What happens to my lifestyle if Social Security benefits are cut by 20%?
- Do I have a guaranteed income floor covering essential expenses?
If you’re uncomfortable with these answers, consider underwriting your retirement the way successful businesses underwrite operations—with guarantees, predictable cash flows, and appropriate risk management.
The Guaranteed Personal Pension isn’t right for everyone, and it shouldn’t be your entire strategy. But for many, allocating a meaningful portion of assets to create a guaranteed income floor represents one of the most important financial decisions they’ll make.
Because retirement should be about living your life, not constantly worrying about whether your money will last. A Guaranteed Personal Pension provides something no investment portfolio can: certainty.
About Beacon Financial Pathways
Beacon Financial Pathways helps business owners and families align their financial, legal, and tax strategies to protect what matters most and plan for the road ahead with confidence. Our team-based approach brings together financial planning, tax strategy, legal review, and business valuation to create whole-life plans tailored to your goals.
For more information about how a Guaranteed Personal Pension strategy might fit into your retirement plan, contact us at 714-224-4100 or visit bcnfp.com.
Important Disclosures: This article is for educational and informational purposes only and should not be construed as personalized investment advice. Annuities are long-term insurance products designed for retirement purposes and may not be suitable for all investors. Guarantees are based on the claims-paying ability of the issuing insurance company. Early withdrawals may be subject to surrender charges and IRS penalties. Please consult with a qualified financial professional before making any investment decisions.