What is a retirement income floor used for in planning?

• A. A floor price for retirement products
• B. The minimum required retirement savings
• C. A tax deduction threshold
• D. A guaranteed minimum income level from pensions or annuities used to cover essential expenses and inform portfolio sequencing

Answer: (C)

A retirement income floor is a guaranteed minimum income stream from sources like pensions, annuities, or Social Security that is designed to cover essential living expenses in retirement. This floor protects against longevity risk and market volatility by ensuring that basic needs are met regardless of investment performance. It also guides how you sequence withdrawals: essential expenses are funded first from these secure income sources, while any additional assets can be invested more aggressively to support discretionary spending and growth once the floor is secured. This isn’t about a floor price for products, a minimum savings target, or a tax deduction threshold, but rather a protected income base used to plan who you rely on first for steady cash flow and how you order using your remaining assets.