Retirement Income Checklist: The 7 Questions to Answer Before You Buy Anything

Before buying an annuity or any other income product, answer seven questions: what your essentials cost each month, what guaranteed income you already have, the dollar gap between them, when you will claim Social Security, how much cash you can reach this week, what job this specific money has, and how the person recommending it gets paid.

Airline pilots run a checklist before every single takeoff. Not because they forgot how to fly, and not because the list is complicated, but because a written list catches the one item a confident brain skips. The checklist is not a test of competence. It is insurance against the ordinary human habit of assuming you already know.

Buying retirement income deserves the same treatment. The product decision (annuity or no annuity, this contract or that one) is the last item on the list, not the first. Nearly every regret we hear about a retirement income purchase traces back to a number that was never written down before the paperwork got signed.

So write them down. Seven questions, in order, on one page. If you cannot answer question three, stop. Do not buy anything yet. That single rule prevents more bad purchases than every product comparison on this site combined.

Why work a checklist before you shop?

Because a product cannot be evaluated without a target, and the target is a monthly dollar figure you have not calculated yet. An income annuity that pays $1,400 a month is neither good nor bad in the abstract. It is good if your gap is $1,350 and poor if your gap is $400 and you just tied up money you needed for something else.

• A written gap number turns “how much annuity should I buy” from an opinion into arithmetic.
• It makes competing recommendations comparable, since every proposal now gets measured against the same target.
• It surfaces the cheaper fixes first, such as Social Security timing, which cost nothing to consider.
• It gives you a reason to say no that has nothing to do with willpower.
• It gives your advisor something real to work with instead of a vague sense of unease.

The rest of this page is the list. Work it with a pen, in one sitting, using real statements rather than memory.

Question 1: What do your essential expenses actually cost each month?

Add up only the bills that would still arrive if you never left the house. This is your essentials number, and it is the foundation every other answer sits on. Guessing here quietly corrupts everything downstream, so pull three months of bank and card statements instead of estimating.

• Housing. Mortgage or rent, property tax, homeowners or renters insurance, HOA.
• Utilities. Electric, gas, water, trash, internet, phone.
• Food. Groceries, not restaurants.
• Health. Premiums, regular prescriptions, predictable copays.
• Transportation. Car payment, insurance, fuel, routine maintenance.
• Insurance and obligations. Life insurance premiums, alimony, support payments, any fixed debt.
• A realistic buffer. Most people underestimate by 5% to 10%. Add it back.

Keep travel, gifts, hobbies, dining out, and grandchildren off this list. They matter, but they belong in a second category. The whole point of separating essentials is that essentials are the expenses you want covered by income that arrives whether or not markets cooperate. Our guide to how much retirement income you need walks through building the full budget.

Question 2: What guaranteed income will you already have?

List every source of income that arrives on a schedule regardless of the market, with its actual dollar amount and its start date. For most households this is a short list, which is precisely why it is worth writing down.

Note the start dates. Income that begins at 67 does nothing for a gap that opens at 63, and that four-year stretch is its own planning problem, sometimes called the bridge period. It often needs a different solution than the permanent gap does.

Question 3: What is the gap, in dollars per month?

Subtract question two from question one. The result is your monthly income gap, and it is the single most important number in this entire process. If you cannot produce this number, you are not ready to buy any income product, from anyone, at any price.

Three outcomes are possible, and each points somewhere different.

Our retirement income gap guide shows the math in more detail, and the retirement income floor article explains why covering essentials first is the structure most planners start from.

Question 4: When will you claim Social Security, and have you priced the alternative?

Claiming age changes your guaranteed income permanently, which means it changes your gap, which means it changes how much product you need. It is the highest-leverage decision on this list and the only one that costs nothing to evaluate.

The Social Security Administration’s rules are specific. Claiming at 62 when your full retirement age is 67 produces a permanent reduction of 30% (SSA, Retirement Age and Benefit Reduction). Delaying past full retirement age adds delayed retirement credits of 8% per year until age 70 (SSA, Retirement Benefits, 2026 edition). Benefits then receive annual cost-of-living adjustments, 2.8% for 2026 (SSA, October 2025).

Our 62 vs 67 vs 70 breakdown works through the trade-offs, including the reasons that claiming early is the right answer for some households.

Question 5: How much cash can you reach this week?

Count only money you could have in hand within a few days without a penalty. Savings, checking, money market. That figure, divided by your essentials number from question one, tells you how many months of cushion you have.

• Three to six months of essentials, minimum, stays liquid. This is not the money that buys anything.
• Known expenses in the next two years stay liquid too. A roof, a car, a wedding, a deductible.
• Count only penalty-free access. A CD with an early withdrawal penalty is not the same as savings.
• Do not count home equity as cash. Reaching it takes time and usually costs money.
• If the cushion is not built, stop here. Building it comes before any lock-up product.

This is the question that most often produces a “not yet,” and a “not yet” is a perfectly good outcome for a checklist to produce.

Question 6: What is this specific money’s job, and when do you need it back?

Every dollar has one job, and income products are built for exactly one of them. Write the job down for each pool of money before deciding where it lives.

If you cannot name the job, that is the answer: the money is not ready to be committed. And if the job is “grow aggressively for 20 years,” a fixed or income annuity is generally the wrong tool, which is a finding worth having before a sales conversation rather than during one.

Longevity belongs in this question too. Planning for the average lifespan is planning to run short half the time, which is the core idea behind longevity risk and the main argument for covering essentials with income that does not stop.

Question 7: How does the person recommending this get paid?

Ask directly, and expect a direct answer. Compensation does not make a recommendation wrong, but not knowing it makes the recommendation impossible to weigh.

• Ask the question plainly. “How are you paid if I buy this, and how are you paid if I do not?”
• Ask what else was considered. A recommendation with no rejected alternatives is a product pitch.
• Ask for the gap math back. If they cannot restate your question-three number, they did not build a plan around it.
• Ask about surrender terms and fees in writing. Verbal summaries are not comparable across proposals.
• Ask what happens if you say no. Pressure at this point is the signal, not the product.

We publish our own answer on how we get paid, and our advisor vetting questions list goes further into what a good conversation sounds like.

What to do with your answers

You now have one page with seven answers, and the page tells you what comes next without anyone selling you anything. That is the entire value of running a checklist before you shop rather than after.

Back to the cockpit. Nobody runs a preflight checklist because they expect to find a problem. They run it so that the one item they would have skipped gets checked anyway. Seven questions, one page, one sitting.

Any annuity guarantees discussed on this site are backed by the claims-paying ability of the issuing insurer and are not FDIC insured. This page is general education, not tax or investment advice.

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