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Annuities vs. Social Security: What’s the Difference and Why It Matters for Your Retirement Plan

June 02, 2025

When planning for retirement, two terms that often come up are Social Security and annuities. Both can provide you with a steady stream of income, but they serve different purposes, have different rules, and offer distinct benefits. Understanding how they work—and how they can work together—is key to building a secure financial future.

What Is Social Security?

Social Security is a federal program that provides retirement, disability, and survivor benefits funded through payroll taxes. For most retirees, Social Security acts as a foundational source of income.

Key Features:

• Based on your earnings history and age at retirement
• Benefits begin as early as age 62, but increase if you delay up to age 70
• Payments last for your lifetime and adjust for inflation

While it’s a valuable safety net, Social Security alone may not be enough to maintain your desired lifestyle in retirement.

What Is an Annuity?

An annuity is a financial product typically sold by insurance companies that can provide a guaranteed income stream in retirement. You invest a lump sum or make payments over time, and in return, the annuity pays you back through regular distributions.

Key Features:

• Can be fixed or variable, immediate or deferred
• Offers tax-deferred growth
• Provides a customizable income strategy—such as lifetime income, joint income for spouses, or a set period
• Can supplement Social Security and pension benefits

Unlike Social Security, annuities are private contracts that you control. They can be a powerful tool for filling retirement income gaps and reducing longevity risk.

Annuity vs. Social Security: Key Differences

How They Work Together

Smart retirement planning doesn’t mean choosing one over the other—it’s about using both strategically. Social Security provides a base layer of income, while annuities can cover essential expenses or enhance your lifestyle with additional income security. Together, they can create a more predictable, stress-free retirement.

Ready to Build Your Retirement Income Plan?

At Patria Wealth Group, we specialize in designing custom retirement strategies that help you make the most of your Social Security benefits and leverage annuities to your advantage. Whether you’re nearing retirement or already retired, we’re here to help you create a personalized income plan that brings confidence and clarity to your future.

 Contact Patria Wealth Group today to schedule your free retirement income consultation.

Let’s secure your retirement—together.