Many people think retirement planning is simple. You save your money, invest it, and then take withdrawals when you retire. But when real people with real goals sit down and run the numbers, things get more complicated.

This article walks through a real case study involving a married couple who spoke with an advisor about Fidelity recommended annuities. The goal here is not to criticize Fidelity, but to show how different annuity strategies can lead to very different outcomes.

The most important question in retirement planning is not, “Is this product good?”
The real question is, “Does this improve your situation?”

The Couple’s Retirement Situation

This couple is married and doing very well financially. One spouse is 67 years old, and the other is 61. They are both fully retired within the next 12 months, which means income planning is no longer optional.

They want $10,000 per month in guaranteed income, on top of Social Security. That income needs to last for the rest of their lives, especially since the younger spouse may need income for 35 years or more.

Here is what their situation looks like:

- Both spouses fully retired within one year

- Large investment portfolio

- Portfolio allocation of about 70% stocks and 30% fixed

- Withdrawal rate close to 4%

- Long planning horizon because of the younger spouse

At first glance, everything looks fine. But retirement is not just about averages. It is about worst-case and best-case outcomes.

Why the 4% Withdrawal Rule Matters

The 4% rule is often used as a guideline for retirement withdrawals. Based on studies, withdrawing about 4% per year gives a high chance that money will last long enough.

In this case, the withdrawal rate gave the younger spouse about a 93% chance of success over 35 years.

That may sound good. But think about it this way. If someone told you a plane had a 93% chance of landing safely, would you get on it if there was a safer option that would get you there in the same amount of time?

Retirement income should feel certain. For many people, “probably” is not good enough when it comes to paying bills for life.

The Fidelity Annuities Recommendation

After meeting with their advisor, the couple was shown a plan using a Fidelity Annuites-style approach. The recommendation was a single premium immediate annuity (SPIA).

This type of annuity works like this:

- One large lump sum is paid upfront

- Income starts within 12 months

- Payments are guaranteed for life

- A return-of-premium death benefit is included

In this case, the premium was just under $1.75 million to create $10,000 per month for life.

The return-of-premium feature means any money not paid out as income would go to beneficiaries. Once the full amount is paid back, the income continues, but the death benefit ends.

This approach has some real strengths.

Pros and Cons of the Single Annuity Approach

There are good reasons why large firms recommend this type of annuity. It is simple and easy to explain.

Here are the main benefits:

- Guaranteed income for life

- Simple structure

- Easy to understand

- Works well for large portfolios

But simplicity alone does not mean it is the best solution.

The key question remains: Does it actually improve the retirement outcome compared to staying invested?

Comparing Worst-Case and Best-Case Outcomes

To answer that question, both worst-case and best-case scenarios must be tested.

In a worst-case scenario, the market performs poorly right when retirement starts. This is called a negative sequence of returns. Using real S&P 500 returns starting around the year 2000, the couple could run out of money in their late 80s or early 90s if they stayed invested.

With the annuity strategy, income remained stable for life. Withdrawal rates stayed closer to 3%, and income reliability improved greatly.

In a best-case scenario, the market performs very well early in retirement. Using strong S&P 500 returns from the mid-1990s, both strategies ended up very close over time.

Even in the best-case scenario, the annuity strategy slightly pulled ahead by age 100.

How the Key Retirement Indicators Changed

There are four main indicators that matter in retirement planning. Below is how they compared.

Indicator	Portfolio Only	Annuity Strategy
Investment Net Worth	Higher early, lower later	Stable long-term
Withdrawal Rate	Around 4%	Around 3% or less
Income Reliability	Mostly market-based	Mostly guaranteed
Discretionary Assets	Low in bad markets	Much higher

In short, the annuity strategy improved income reliability and reduced risk without harming long-term results.

A Smarter Alternative to Fidelity Annuities

Once it was clear that an annuity improved the outcome, the next question was whether there was a more efficient way to do it.

Instead of using one large annuity, a strategy using four annuities was designed.

Here is how it worked:

- Annuity #1 pays $10,000 per month for the first five years (starting in 12 months)

- Annuities #2, #3, and #4 are deferred for six years

- After Annuity #1 stops, the three deferred annuities pay $10,000 per month for life (total combined)

The income, timing, and guarantees were the same as the original Fidelity Annuities-style plan.

But there was a big difference.

The Cost Savings of the Multi-Annuity Strategy

By using multiple annuities instead of one, the total premium needed was reduced.

The results:

- Same $10,000 per month income

- Same start date

- Same lifetime guarantees

- $133,000 less premium required

That is about 7.5% less capital committed to get the same result.

On top of that, spreading the income across multiple A-rated companies adds an extra layer of safety.

Understanding the Trade-Offs

This strategy is more efficient, but it is not as simple.

Using multiple annuities means:

- More illustrations to review

- Different income rider fees

- Different death benefit calculations

- More complexity

Income riders are calculated differently by each company, which can be confusing. Death benefits may go down, then up, then down again, depending on when income starts.

That is why it is important to focus on the guaranteed illustration pages, not the hypothetical growth numbers.

Why Flexibility Matters in Retirement

One major advantage of using multiple annuities is flexibility.

If income needs change later, the couple has options:

- Turn on only one annuity

- Delay income on others

- Let income grow larger

- Adjust based on market or life changes

With one large annuity, there are no adjustments. With multiple annuities, there are choices.

Outcomes matter more than simplicity.

When This Strategy Works Best

This type of strategy does not fit everyone. It works best when a few conditions are met.

It is most effective for:

- People who need income within 12 months

- Couples in their early 60s

- Couples with a 5+ year age gap

- Retirees who want a guaranteed income

The age gap matters because payout rates improve as the younger spouse gets older.

A Simple Way to Think About It

Think of retirement income like building a foundation for a house.

One builder pours a huge slab of concrete. It works, but it uses more material than needed.

Another builder designs a smarter foundation that lasts just as long, but uses less concrete.

Both houses stand for life. One just costs more.

That is the difference between a basic Fidelity Annuities-style approach and a more efficient annuity strategy.

Final Thoughts on Fidelity Annuities

Fidelity Annuities can be a good solution. The strategy is clean, safe, and effective.

But in some cases, there is a smarter way to get the same income using less money and more flexibility. If you want to learn more, schedule a call.

The goal is not to sell annuities.
The goal is to improve outcomes.