Consumers Can Lift Retirement Income by 30% When Using This Strategy
New research shows that retirees can boost their first-year spending power by 30% through “do-it-yourself 4%” withdrawals in 2026.
The findings from TIAA look at several strategies that examine guaranteed income. The first, Standard A, is the typical 4% systematic withdrawal based on inflation. Standard B annuitizes a portion of the retirement savings while also incorporating a 4% systematic withdrawal on the rest.
Using a model that annuitizes one-third of total savings, then applying the 4% withdrawal on the leftover one-third, TIAA found that a 67-year-old retiree who selects its most popular annuity contract option would see 30% more money. For example, with $1 million saved, retirees would earn an additional $51,867 instead of $40,000 in 2026, or $989 more to spend monthly.
Further, TIAA notes that a 67-year-old retiree who wants $40,000 to spend in their first year would need $1 million in savings under the 4% rule approach. If the same person annuitized one-third of savings, then took 4% from the remaining two-thirds, then they would only need $775,000 to get $40,000.
This number could be higher for long-term contributors to TIAA Traditional members who annuitize with the TIAA Loyalty Bonus platform, for an added savings of $55,647.
According to TIAA, as of March 1, 2026, first-year annuitants, or a single 67-year-old person with payments guaranteed for at least 10 years, would receive 7.6% annually by using TIAA Traditional.
TIAA experts note that as consumers and retirees face volatile markets and rising longevity, more could be turning their interest towards annuity options to safeguard retirement income.
“Amid volatile markets, retirees and soon-to-be retirees might do well to consider a guaranteed income stream to boost their retirement checks,” TIAA said in the research. “Fixed annuities offer guaranteed payments for life—no matter what happens in the market on a given day or how long you live. This superlative benefit can make it easy to miss another perk: Fixed annuities almost always produce more cash flow, even if a retiree hasn’t been able to save as much as they’d hoped.”
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.