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Designing More Reliable Retirement Income: What the Research Reveals

Presenters: Wade Pfau and Alex Samoila
Featuring: Keith Huryk, Rethinking 65
Original Air Date: September 16, 2026
Run Time: Approximately 84 minutes
Topic Area: Retirement Income, Annuities, Longevity Planning, Guaranteed Lifetime Income, Variable Annuities

Key Takeaways

• Longer retirements increase the importance of building income strategies that can provide reliable lifetime income while preserving flexibility and liquidity.
• Wade Pfau's research examined three traditional variable annuity designs with guaranteed lifetime withdrawal benefits using rolling historical market periods from 1871 through 2024.
• The research demonstrated that advisors should not evaluate an annuity based on a single feature such as its roll-up rate, equity allocation, withdrawal rate, or fees. The interaction among all of these features ultimately determines the income produced.
• In the historical scenarios examined, the design emphasizing age-based withdrawal rates and step-ups frequently generated greater initial retirement income than designs emphasizing benefit-base roll-ups or greater equity exposure.
• A higher benefit base does not necessarily produce more retirement income if it is paired with a lower guaranteed withdrawal rate.
• Alex Samoila discussed how different annuity structures may appeal to clients with different attitudes toward market risk—from more conservative investors seeking guaranteed benefit-base growth to more bullish investors seeking greater market participation.
• Envision with Retire Pay was presented as a variable annuity design combining market participation with withdrawal rates that increase during deferral, step-up opportunities, and access to investment gains.
• Advisors should evaluate income, liquidity, market participation, fees, insurer financial strength, guarantees, and client risk tolerance together rather than focusing on the feature that appears most attractive in isolation.

Rethinking Longevity and Retirement Income

The session began with a broader question: What happens to retirement planning if clients live substantially longer than previous generations?

Alex Samoila discussed advances in longevity research and suggested that financial professionals may increasingly need to think about longevity not simply as a risk to mitigate, but as an opportunity that must be funded.

Longer lives can create longer retirements and potentially more changes in a client's circumstances along the way. That makes three considerations particularly important:

• Reliable income
• Financial strength and security
• Continued access to assets

Traditional retirement-income planning often involves trade-offs among those objectives. For example, clients may gain greater income guarantees but sacrifice some liquidity.

The challenge for advisors is finding combinations of investments and protected income that align with what an individual client actually values.

Moving Beyond the Traditional Stock-and-Bond Efficient Frontier

Wade Pfau began the research portion of the presentation by revisiting the concept of the efficient frontier.

Rather than thinking only in terms of the traditional combination of stocks and bonds, Wade explained that retirement-income planning can introduce another dimension: protected lifetime income.

For clients who do not already receive sufficient guaranteed income from sources such as Social Security or pensions, moving a portion of the traditional fixed-income allocation toward protected lifetime income may improve the ability of the overall retirement plan to support spending.

That leads to the next question:

If an annuity is being used to generate reliable lifetime income, which design features actually matter most?

The answer, according to the research, is not as simple as comparing one product feature.

Three Different Approaches to Guaranteed Lifetime Income

Wade's research compared three traditional variable annuity designs with guaranteed lifetime withdrawal benefits.

1. Step-Up Design With Age-Based Withdrawal Rates

The first design did not provide a guaranteed roll-up on the benefit base. Instead, it emphasized:

• An 80% maximum equity allocation
• Benefit-base step-ups when the contract reached new high-water marks
• Withdrawal rates that increased based on the client's age and length of deferral
• Larger withdrawal-rate increases at certain key ages

The important distinction is that the design focused less on guaranteeing growth of the benefit base and more on increasing the withdrawal percentage ultimately applied to that benefit base.

2. Benefit-Base Roll-Up Design

The second design represented an average of several traditional variable annuity designs and included:

• Approximately 70% maximum equity exposure
• A 7% simple roll-up on the benefit base
• Step-up opportunities
• Age-based withdrawal rates
• A roll-up period of up to 10 years

Here, the guaranteed growth mechanism was primarily focused on increasing the benefit base before income began.

3. Stacking Design With Greater Investment Freedom

The third design allowed:

• Up to 100% equity exposure
• A 6% simple benefit-base roll-up
• Step-ups to new high-water marks
• “Stacking,” allowing subsequent roll-ups to apply to a stepped-up benefit base
• Lower age-based withdrawal rates than some of the alternatives

This design provided greater equity exposure and potential benefit-base growth, but those features came with trade-offs elsewhere in the contract.

The Most Important Lesson: No Single Feature Determines Income

An advisor looking at these three designs might naturally focus on the most attractive individual feature.

Which product has the highest roll-up?

Which allows the greatest equity exposure?

Which has the lowest fee?

Which has the highest benefit base?

But Wade's research showed why those questions alone can be misleading.

Retirement income is ultimately determined by how all of the contract's features interact.

Those variables can include:

• Equity allocation
• Investment performance
• Benefit-base roll-ups
• Step-ups
• Withdrawal rates
• Age when income begins
• Length of the deferral period
• Mortality and expense charges
• Rider costs
• Investment expenses

A product offering 100% equity exposure may generate greater account growth, for example, but another design could still produce more guaranteed income if it provides a substantially higher withdrawal rate.

What the Historical Research Found

Wade analyzed rolling historical market periods using market data from 1871 through 2024.

The analysis examined different issue ages and income-start ages and asked how frequently the step-up design emphasizing higher withdrawal rates produced more initial income than the design allowing 100% equity exposure.

Across many of the combinations examined, the withdrawal-rate-focused design produced greater initial income in a majority of historical periods—and in many combinations, it did so at least 90% of the time.

The presenters also examined several examples involving a 10-year deferral period.

For a hypothetical $100,000 initial premium beginning at age 52 with income starting at age 62, average initial income across the historical periods was approximately:

• $13,700 from the step-up/withdrawal-rate design
• $9,175 from the benefit-base roll-up design
• $9,038 from the stacking/investment-freedom design

The same general pattern continued in examples involving older issue and income-start ages.

Importantly, the analysis reflected the fees associated with the products. Wade confirmed during the Q&A that the research results were net of fees, including mortality and expense charges, assumed subaccount expenses, and applicable rider fees.

What Happened During a Bear Market?

The research then examined a specific historical bear-market scenario.

The hypothetical client purchased the annuity at age 57, deferred income for 10 years, and began lifetime income at age 67.

Higher-equity designs produced higher contract values and benefit bases.

But that wasn't the end of the story.

At age 67, the step-up design provided an 8% withdrawal rate, compared with approximately 6.03% and 5.4% for the other designs examined.

As a result, the guaranteed initial income from the step-up design was approximately $14,487, compared with slightly more than $10,000 from each of the other designs.

The example highlighted an important distinction:

A larger benefit base doesn't automatically mean a larger retirement paycheck.

The withdrawal rate applied to that benefit base can be equally—or sometimes more—important.

And What Happened During a Bull Market?

The presenters then examined a strong market period using the same age-57-to-67 framework.

As expected, greater equity exposure helped produce higher contract values and benefit bases.

But once again, the higher withdrawal rate changed the final income calculation.

The step-up design generated approximately $27,435 of initial income, compared with approximately $19,678 and $20,042 from the other two designs.

The lesson wasn't that one particular product structure will always outperform another.

Rather, Wade emphasized that advisors need to evaluate the entire income mechanism instead of assuming that higher equity exposure, a higher roll-up, or another attractive standalone feature will necessarily generate the most retirement income.

Matching the Design to the Client

Alex then shifted the discussion from research to practical product positioning.

He described a spectrum of clients ranging from bearish or highly risk-averse to bullish and comfortable with equity-market exposure.

A more conservative client may place greater value on guaranteed benefit-base growth.

A more market-oriented investor may prefer to maximize market participation while still creating a protected future income stream.

And many clients fall somewhere between those two extremes.

Alex described three MassMutual approaches designed around those different preferences:

Retire Core
Designed around guaranteed benefit-base growth and positioned for clients seeking greater protection from poor market outcomes.

Retire Core Stacking
A hybrid approach combining market participation, benefit-base roll-ups, and stacking opportunities.

Envision with Retire Pay
A more market-oriented variable annuity approach that combines investment participation with withdrawal rates that increase during the deferral period.

The presenters emphasized that these aren't interchangeable solutions. The appropriate design depends on the client's objectives, risk tolerance, desired liquidity, income needs, and willingness to participate in market risk.

Understanding Envision With Retire Pay

Alex spent additional time explaining the Envision variable annuity with the Retire Pay rider.

Unlike a traditional design that primarily increases the benefit base through a guaranteed roll-up, Retire Pay increases the client's guaranteed withdrawal rate as income is deferred.

Alex compared the concept to delaying Social Security: waiting longer can result in a higher future income percentage.

The design also provides opportunities to lock in market growth through step-ups.

Clients can select annual or quarterly step-ups, with the quarterly option providing four opportunities per year to establish a new high-water mark. Alex noted that the quarterly option carries an additional cost.

Another feature discussed was access to gains during the surrender period. According to Alex, clients can access investment gains without automatically locking in the guaranteed lifetime withdrawal rate, although withdrawals can affect the benefit base.

This combination is intended to address a common retirement-income trade-off:

How can clients pursue guaranteed future income without completely giving up access to their assets along the way?

Income Can Continue to Step Up After Withdrawals Begin

One question from attendees involved what happens after guaranteed lifetime income begins.

Wade clarified an important distinction between a roll-up and a step-up.

Once guaranteed income begins, the roll-up may stop.

However, step-ups can remain available if the account reaches a new high-water mark after accounting for distributions.

That becomes more difficult once withdrawals begin because the investments must overcome the distributions being taken from the contract, but the opportunity for a future step-up does not necessarily disappear.

How Do These Products Compare With Fixed Indexed Annuities?

Several attendees asked how the variable annuity designs compared with fixed indexed annuities offering lifetime-income riders.

Wade cautioned against making a broad comparison without examining a specific FIA.

A meaningful comparison would need to consider:

• Age-based withdrawal rates
• Deferral credits or roll-ups
• Index caps
• Fees
• Growth potential
• Step-up provisions
• Distribution rules
• Income guarantees

Wade noted that FIAs may offer stronger initial withdrawal rates and potentially less fee drag, but they can also provide less growth opportunity and fewer opportunities for benefit-base step-ups.

The appropriate comparison therefore depends on the actual contracts being considered—not simply whether one product is a variable annuity and another is a fixed indexed annuity.

What About Investment-Only Retirement Planning?

The Q&A also addressed advisors who prefer to build retirement-income plans entirely with investment portfolios.

Wade returned to the efficient-frontier concept discussed earlier in the webinar.

Investment portfolios alone cannot provide the same type of risk pooling and longevity credits available through insurance products.

His research suggests that allocating part of the traditional fixed-income portion of a retirement portfolio to protected lifetime income can potentially improve the ability to support retirement spending while reducing pressure on the remaining investment portfolio.

This doesn't mean replacing the investment portfolio.

Instead, the concept is to consider how equities and protected lifetime income can work together, particularly for clients whose Social Security and pension income are insufficient to cover their desired spending.

Don't Overlook the Insurance Company Behind the Guarantee

A guaranteed lifetime-income benefit is ultimately dependent on the claims-paying ability of the issuing insurance company.

That makes insurer financial strength another important component of the due-diligence process.

An attendee specifically asked what happens if people begin living dramatically longer.

Alex emphasized the importance of evaluating an insurer's financial position, capitalization, history, and ability to meet long-term obligations. Wade also pointed out that insurers can receive some natural longevity hedging from operating both annuity and life-insurance businesses: longer lifespans can increase annuity obligations while delaying life-insurance death claims.

For advisors, the larger point is straightforward:

Evaluating an income guarantee should include evaluating the company standing behind it.

Practical Application for Financial Advisors

The research presented during the webinar provides a useful framework for evaluating guaranteed retirement-income products.

Instead of beginning with:

“Which annuity has the highest roll-up?”

consider asking:

• How much guaranteed income could this design actually produce at the client's expected income-start age?
• How does the withdrawal rate change if the client delays income?
• What opportunities exist for step-ups?
• How much market participation does the client actually want?
• What happens during poor market periods?
• What are the total costs and how do they affect contract growth?
• How much liquidity will the client retain?
• What happens if the client needs money before guaranteed income begins?
• How financially strong is the issuing insurer?
• How does the product complement Social Security, pensions, investments, and other retirement-income sources?

Ultimately, the research reinforces a simple but important principle:

Don't evaluate retirement-income products one feature at a time.

Withdrawal rates, roll-ups, equity exposure, step-ups, fees, deferral periods, liquidity, and guarantees work together. The most appropriate solution is the one whose complete design aligns with the client's objectives and the role it is intended to play within the broader retirement-income plan.

Compliance Note

This webinar was provided for educational purposes and included discussion of specific insurance products and features. Product availability, fees, withdrawal rates, investment options, guarantees, and other contract provisions may vary by product, jurisdiction, issue age, and other factors and may change over time.

Variable annuities involve investment risk, and contract values may fluctuate. Guarantees are subject to the claims-paying ability of the issuing insurance company. Financial professionals should review current product materials and applicable disclosures and consider each client's objectives, risk tolerance, liquidity needs, financial circumstances, and overall retirement plan before making a recommendation.