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Beyond the 3-Legged Stool: A Holistic Retirement Strategy with Indexed Annuities and Indexed Universal Life Insurance

By Steve Gaito

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Traditional retirement planning often revolves around the concept of the “3-legged stool”: Social Security, pensions, and personal savings. While this approach has served retirees for generations, it is becoming increasingly clear that the modern landscape demands a more versatile and comprehensive strategy. This article explores the importance of replacing the 3-legged stool approach with a more holistic retirement strategy that includes indexed annuities and universal life insurance.

The Limitations of the 3-Legged Stool

  1. Uncertain Pension Landscape: Traditional pensions have become less common in recent years, leaving many retirees with only two legs on their stool—Social Security and personal savings. The reliability of pensions, once a staple of retirement planning, is now in question, as companies shift toward defined contribution plans.
  2. Volatility in Personal Savings: Personal savings in 401(k)s and IRAs are subject to market fluctuations. Economic downturns can severely impact retirement portfolios, leaving retirees vulnerable to market volatility, especially in the critical years leading up to and during retirement.
  3. Longevity Risk: With increasing life expectancy, retirees face the challenge of stretching their savings over a longer retirement period. Outliving one’s savings is a significant concern, especially when relying solely on personal savings.

A Holistic Approach with Indexed Annuities

Indexed annuities provide a compelling solution to the limitations of the 3-legged stool approach:

  1. Guaranteed Income: Indexed annuities offer the potential for guaranteed lifetime income, shielding retirees from the risk of outliving their savings. This steady stream of income can complement Social Security, creating a reliable foundation for retirement.
  2. Protection from Market Volatility: Indexed annuities link returns to a market index but provide a floor that shields the principal from market losses. This feature allows retirees to participate in market gains without the full impact of downturns, providing peace of mind during market turbulence.
  3. Customized Options: Indexed annuities come in various forms, including fixed-indexed annuities and variable-indexed annuities, allowing retirees to tailor their investments to their risk tolerance and financial goals.

The Role of Indexed Universal Life Insurance

Indexed Universal Life Insurance (IUL) complements the holistic retirement strategy by offering:

  1. Tax-Advantaged Growth: IUL policies provide a tax-advantaged way to accumulate wealth. Policyholders can access cash value in retirement without incurring income tax, potentially enhancing their retirement income.
  2. Flexible Premiums: IUL policies offer flexibility in premium payments, making them adaptable to changing financial circumstances. This feature is especially valuable for retirees seeking control over their insurance coverage and premium commitments.
  3. Legacy Planning: IUL policies can also serve as a tool for estate planning, enabling policyholders to leave a legacy for their loved ones while enjoying tax-advantaged growth during their lifetime.

A New Era of Retirement Planning

Replacing the traditional 3-legged stool approach with a holistic retirement strategy that incorporates indexed annuities and universal life insurance recognizes today’s retirees’ evolving needs and challenges. Individuals can build a more resilient and adaptable retirement plan by diversifying income sources, mitigating market risks, and incorporating tax-efficient strategies.

It’s important to note that everyone’s retirement strategy should be personalized based on their unique financial situation, goals, and risk tolerance. I specialize in creating retirement plans that align with your specific needs and aspirations. In doing so, retirees can embark on their retirement journey with greater confidence and financial security.


Steve is the owner of Faith-Based Health Care and Retirement Resource Management. He is a National Speaker on the topic of Social Security optimization, quoted in national publications like Money Magazine, US News and World Reports, and Fox Business. Steve loves to educate and teach on financial topics like taxation of retirement accounts, long term care, healthcare, and efficient savings plans for small businesses. He has provided financial planning for missionaries through the International Mission Board. You can find Steve at 68 South Main St. in Marion, NC by calling 828-559-0299, email or visit his website at

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