Retirement income planning has always involved uncertainty.

How long will the client live? What will markets do? How much can they safely spend? And how can an advisor provide reliable income without sacrificing too much growth or liquidity?

As clients potentially spend more years in retirement, those questions become even more important.

During a recent Financial Experts Network webinar, retirement researcher Wade Pfau and Alex Samoila of MassMutual explored new research into variable annuities with guaranteed lifetime withdrawal benefits and what actually drives the amount of income these products can generate.

The findings challenge a common way of comparing annuities.

The product with the highest roll-up, greatest equity allocation, or largest benefit base doesn't necessarily provide the most retirement income.

What matters is how all the pieces work together.

Maybe We Need to Think Differently About Longevity

For years, retirement planning has treated longevity primarily as a risk.

What happens if the client lives too long and runs out of money?

Alex suggested another way of looking at the issue: longevity isn't simply a risk to mitigate—it is something that needs to be funded.

If clients spend 30, 40, or potentially even more years in retirement, they'll need more than a large portfolio balance.

They'll need income.

They'll also need flexibility because a lot can change over a retirement lasting several decades.

That creates competing objectives.

Clients want reliable income, but they may also want growth.

They want guarantees, but they don't necessarily want to give up access to their money.

And they want security, but some clients are much more comfortable with market risk than others.

The challenge is figuring out how those pieces fit together for the individual client.

What If the Retirement Efficient Frontier Isn't Just Stocks and Bonds?

Wade began with an interesting way to rethink the traditional portfolio.

Most advisors are familiar with the efficient frontier involving different combinations of stocks and bonds.

But retirement introduces a risk that traditional investments can't eliminate: longevity risk.

Wade explained that protected lifetime income can potentially take over part of the role traditionally assigned to bonds.

Instead of thinking only about:

Stocks + Bonds

retirement-income planning can also consider:

Stocks + Protected Lifetime Income

For clients who already have substantial Social Security and pension income, that additional protection may not be as important.

But for clients who don't have enough reliable income to support their desired spending, allocating some assets toward a lifetime-income solution may change the dynamics of the entire retirement plan.

So Which Annuity Design Produces the Most Income?

That's where Wade's research became particularly interesting.

He compared three traditional variable annuity designs with guaranteed lifetime withdrawal benefits.

One emphasized step-ups and withdrawal rates that increased with age and deferral.

Another emphasized a guaranteed roll-up of the benefit base.

A third allowed greater equity exposure and stacking, where future roll-ups could apply to a stepped-up benefit base.

At first glance, it's tempting to compare the products by finding the most attractive feature.

A 7% roll-up sounds better than a 6% roll-up.

One hundred percent equity exposure sounds more attractive than 80%.

A larger benefit base sounds better than a smaller one.

But none of those numbers tells you how much income the client will actually receive.

As Wade explained, equity allocation, roll-ups, withdrawal rates, step-ups, investment performance, fees, age, and deferral periods all interact.

The real question isn't which feature looks best. It's how much income the complete design ultimately produces.

A Bigger Benefit Base Doesn't Necessarily Mean a Bigger Paycheck

This may be one of the most useful takeaways for advisors.

Suppose one annuity has a significantly larger benefit base.

It would be reasonable to assume it will provide more income.

But that's only half the equation.

You still have to apply the withdrawal rate.

In one example, Wade looked at a client purchasing an annuity at age 57 and beginning income 10 years later at age 67.

During the bear-market period examined, designs with greater equity exposure produced higher contract values and benefit bases.

But the step-up design offered an 8% withdrawal rate, compared with approximately 6.03% and 5.4% for the other designs.

The result?

The step-up design generated approximately $14,487 of initial income, compared with a little more than $10,000 from the other two designs.

The benefit base mattered.

But so did the percentage applied to it.

What Happens When Markets Are Good?

You might expect the outcome to reverse during a strong bull market.

After all, greater equity exposure should allow the account and benefit base to grow substantially more.

And it did.

But once again, that didn't necessarily translate into the most income.

In the bull-market example, the higher withdrawal rate of the step-up design resulted in approximately $27,435 of initial income, compared with approximately $19,678 and $20,042 from the other designs.

That doesn't mean the step-up design will always be preferable.

It means advisors shouldn't assume the product with the greatest investment freedom or most impressive benefit-base growth will automatically generate the highest retirement income.

The Research Looked at More Than Two Convenient Examples

Wade didn't simply select one good market and one bad market.

The broader analysis used rolling historical market periods from 1871 through 2024 and examined different ages at purchase and different ages when income began.

Across many of those historical periods, the design emphasizing increasing withdrawal rates generated more initial income than the design allowing greater equity exposure.

In many of the age combinations Wade examined, it did so in at least 90% of the historical simulations.

The analysis also accounted for fees.

During the Q&A, Wade confirmed that mortality and expense charges, assumed subaccount expenses, and rider fees were deducted from contract values in the research.

That's particularly important because fees can materially affect long-term variable annuity results.

Don't Shop for Annuities One Feature at a Time

This may be the simplest way to translate the research into practice.

Imagine a client asks:

“Which one has the highest roll-up?”

That's probably not the question you really need answered.

A better series of questions might be:

What will the benefit base be?

What withdrawal rate will apply when the client actually needs income?

How long will the client defer income?

What happens if markets perform poorly?

What happens if markets perform well?

How much equity exposure does the client want?

What are the total costs?

Can the benefit base step up?

What liquidity does the client retain?

And ultimately:

How much reliable income could the client receive?

Wade summarized the research by emphasizing that no single lever—fees, equity allocation, roll-ups, or withdrawal rates—determines the outcome independently.

Your Bearish Client and Bullish Client May Need Very Different Things

The second half of the presentation moved from research to client application.

Alex described clients along a spectrum.

At one end is the extremely conservative investor.

This client may be uncomfortable with almost any market risk. A guaranteed benefit-base roll-up may help provide the confidence necessary to invest and remain invested.

At the opposite end is the bullish investor.

This client believes in equities and may question why they should sacrifice market participation in exchange for a benefit-base guarantee they don't believe they'll need.

And then there's everyone in between.

Those clients may want some combination of market participation and guaranteed benefit-base growth.

Alex used that spectrum to explain three MassMutual approaches: Retire Core for more conservative preferences, Retire Core Stacking as a hybrid approach, and Envision with Retire Pay for investors seeking greater market participation.

The larger planning lesson goes beyond those particular products.

Start with the client, not the annuity.

What Does the Client Actually Value?

Two clients of the same age with identical portfolios may choose very different retirement-income strategies.

One might say:

“I don't care about maximizing growth. I need to know my paycheck will be there.”

Another might say:

“I want the guarantee, but I don't want to give up the market.”

A third might say:

“I'm willing to accept a little less income if it gives me greater access to my money.”

None of those preferences is inherently right or wrong.

They're different planning objectives.

And that's why product comparisons based entirely on one number can miss the point.

Can You Have Guaranteed Income and Still Access Your Money?

Liquidity was another major theme of the presentation.

Guaranteed lifetime-income products have traditionally involved trade-offs. Greater guarantees may mean giving up some access to capital.

Alex explained how Envision with Retire Pay was designed to approach that trade-off differently.

Rather than providing a guaranteed roll-up of the benefit base, the withdrawal rate increases as the client defers income.

Alex compared it to delaying Social Security: each additional period of waiting can result in a higher future withdrawal percentage.

The product also provides annual or quarterly opportunities to lock in new benefit-base high-water marks and allows access to gains during the surrender period under the provisions discussed during the webinar.

For advisors, that raises another useful question:

How much is liquidity worth to this particular client?

A client might accept slightly less guaranteed income in exchange for greater flexibility.

Another client might gladly sacrifice liquidity to maximize guaranteed income.

Again, the answer depends on the client.

What About Fixed Indexed Annuities?

Attendees understandably asked how these results compare with fixed indexed annuities with lifetime-income riders.

Wade's response highlighted exactly why annuity comparisons can become difficult.

You can't meaningfully compare categories without looking at the actual products.

A specific comparison would need to consider withdrawal rates, index caps, roll-ups or deferral credits, fees, growth potential, and step-up opportunities.

Wade noted that FIAs may have stronger withdrawal rates and potentially less fee drag, while potentially offering less growth opportunity and fewer opportunities for new high-water-mark step-ups.

But the specifics of the contracts ultimately determine the comparison.

In other words:

“Variable annuity versus FIA” isn't the end of the analysis. It's the beginning.

And Don't Forget Who Is Providing the Guarantee

There's one more consideration that doesn't appear in a withdrawal-rate table.

Who stands behind the guarantee?

An attendee asked what would happen to insurance companies if people began living dramatically longer.

That question gets to the heart of lifetime-income planning.

A guaranteed lifetime withdrawal benefit could potentially remain in force for decades. Advisors therefore need to consider the financial strength and claims-paying ability of the insurer providing the guarantee.

That means insurer due diligence isn't separate from the income analysis.

It's part of it.

Five Questions Financial Advisors Should Be Asking

1. Should I focus on the roll-up rate when comparing annuities?

Not by itself. Wade's research demonstrated that a higher benefit-base roll-up doesn't necessarily produce greater retirement income. Advisors also need to consider withdrawal rates, equity exposure, step-ups, fees, deferral periods, and how those features interact.

2. Does a larger benefit base always produce more income?

No. The withdrawal rate applied to the benefit base can significantly change the outcome. In the historical examples presented, a design with a smaller benefit base could still generate greater initial income because it offered a higher withdrawal percentage.

3. Does more equity exposure necessarily improve the retirement-income result?

It can increase growth potential, but that doesn't guarantee greater lifetime income. Wade's examples showed that higher equity exposure could create larger contract values and benefit bases while still producing less initial guaranteed income because of lower withdrawal rates.

4. How should I compare a variable annuity with a fixed indexed annuity?

Compare the actual contracts rather than relying on broad product categories. Consider withdrawal rates, caps, growth opportunities, fees, roll-ups, deferral credits, step-ups, liquidity, and guarantees.

5. What's the most important question to ask when evaluating a retirement-income product?

Instead of asking which feature is highest, ask:

“How does this complete design help this particular client accomplish their retirement-income objectives?”

The Bottom Line

Retirement-income products can be complicated.

But the lesson from the research is surprisingly straightforward.

Don't confuse an attractive feature with an attractive outcome.

The highest roll-up doesn't automatically produce the highest income.

The greatest equity exposure doesn't automatically produce the best retirement result.

The largest benefit base doesn't automatically create the largest retirement paycheck.

And the product producing the most income isn't automatically the right choice if the client places greater value on liquidity, growth potential, or another objective.

Start with what the client needs.

Determine how much reliable income already exists through Social Security, pensions, and other sources.

Understand the client's willingness to accept market risk.

Consider how important liquidity and future growth are.

Then look at the complete product—not just the number that looks best on the illustration.

Because when it comes to building more reliable retirement income, it's how all the pieces work together that ultimately matters.