New Research Finds Hybrid Retirement Income Strategies Often Perform Best

WASHINGTON - July 22, 2026 - Retirees are better off combining investments and annuities, rather than relying entirely on withdrawals or full annuitization, according to new research from economists Mark Warshawsky, Chief Executive Officer of ReLIA Strategies, former Deputy Commissioner for Retirement and Disability Policy at the Social Security Administration (2017-2021), and current Senior Fellow at the American Enterprise Institute, and Gaobo Pang, a senior researcher. This research was supported by the American Council of Life Insurers (ACLI).

The analysis, Integrating Social Security, Taxes, and Life Annuities in Retirement Income Strategies, evaluates how different retirement income approaches perform across a wide range of market, longevity, tax and benefit scenarios. The study finds that hybrid strategies, particularly those that pair partial annuitization with continued investment withdrawals, can deliver stronger outcomes than "all-or-nothing" approaches.

The findings unveil crucial insights for the future of retirement security for Americans:

• Partial annuitization offers a more balanced alternative to "all-or-nothing" strategies. Unlike full annuitization, a hybrid approach provides income protection while keeping a portion of assets available for liquidity, growth potential and legacy goals.

• The traditional 4% rule may leave retirees exposed to key risks. While simple and flexible, withdrawal-only strategies can be vulnerable to market volatility, longevity risk and portfolio depletion later in retirement. Indeed, at age 95, the failure rate is 24 percent. The rule works better when paired with other guaranteed income sources.

• Delaying Social Security can strengthen retirement income security. The study finds that optimizing Social Security claiming can help create a larger inflation-protected income stream, in sync with partial annuitization.

"Retirement income planning is not simply a choice between keeping everything invested or converting everything into guaranteed income," said research co-author Mark Warshawsky. "It's much more nuanced than that, and our research shows there's a better path forward. A balanced approach that combines investments, annuities, and optimized Social Security claiming consistently delivers superior outcomes. This research is a practical roadmap that financial advisors and policymakers should use to help Americans achieve true retirement security."

ACLI supported the Warshawsky-Pang research. The paper is solely the responsibility of the authors.

As Americans' retirement needs continue to evolve, ACLI is committed to supporting strategies that help retirees plan for their financial needs no matter how long they live.

To learn more about Integrating Social Security, Taxes, and Life Annuities in Retirement Income Strategies, you can find the full report HERE. Additional information on the study and other ACLI research projects can be found on the ACLI Research Hub.

About the Authors

Mark J. Warshawsky is a Senior Fellow and Wilson H. Taylor Chair in Healthcare and Retirement Policy at the American Enterprise Institute (AEI), where he focuses on Social Security and retirement issues, pensions, long-term care, disability insurance, and the federal budget. Before joining AEI, Dr. Warshawsky served as deputy commissioner for retirement and disability policy at the Social Security Administration. Earlier he served as a member of the Social Security Advisory Board, and assistant secretary for economic policy at the US Department of the Treasury, where he had a key role in the development of the Pension Protection Act of 2006. Dr. Warshawsky has testified often before Congress and is the author, coauthor, or coeditor of eight books, including Retirement Income: Risks and Strategies (MIT Press, 2011) and the ninth edition of Fundamentals of Private Pensions (Oxford University Press, 2010). He has a PhD in economics from Harvard University and a BA in economics from Northwestern University.

Gaobo Pang is an accomplished financial services executive and researcher, with special interests in lifelong financial planning and investment strategies. He has a PhD in economics from University of Maryland and is a Chartered Financial Analyst® Charterholder.

About ACLI

The American Council of Life Insurers (ACLI) is the leading trade association driving public policy and advocacy on behalf of the life insurance industry. 90 million American families rely on the life insurance industry for financial protection and retirement security. ACLI's member companies are dedicated to protecting consumers' financial wellbeing through life insurance, annuities, retirement plans, long-term care insurance, disability income insurance, reinsurance, and dental, vision and other supplemental benefits. ACLI's 275 member companies represent 94 percent of industry assets in the United States.