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Whatever happened to the ‘three-legged stool’ of retirement?

June 28, 2017

Have you ever heard of the ‘three-legged stool’ of retirement? If you have, it’s probably been a while. Once considered the ideal retirement model, the three-legged stool has fallen out of favor because two of the three legs—Social Security and defined benefit pensions—are not as stable as they once were. Consider the following:

—According to the Bureau of Labor Statistics, just 18% of private sector workers have a
defined benefit pension, thereby eliminating a guaranteed source of lifetime income.

—In 2015, Social Security benefits replace just 40% of the average worker’s salary. What’s
more, the Social Security trust fund is expected to deplete its reserves by 2034, and will be able to fund approximately 75% of benefits after that.

Fortunately, there are ways to reinforce the third leg of the stool—retirement savings and other personal assets—so that you can still enjoy a long and fulfilling retirement.

Here are two proven funding sources you may want to consider if you need to compensate for any shortcomings:

—With people living longer than ever, it’s important to make sure the money you have set
aside will last the rest of your life. While Social Security provides a lifetime supply of income, it may not be enough to support your desired lifestyle. If you think you’ll need

additional income and do not have a pension, a lifetime income annuity can be an excellent way to make up the difference.

—Although the primary purpose of life insurance is to deliver death benefit protection, many permanent life
policies accumulate cash value. If your need for protection decreases over time, you can borrow against this cash value—tax free in most cases—and use the money to supplement your retirement lifestyle.

While the three-legged stool of retirement may be a bit wobbly, the good news is a secure future is still within reach. The main difference these days is that you will most likely have to build it yourself.

This educational third-party article is provided as a courtesy by Linda Poole, Agent, New York Life Insurance Company. To learn more about the information or topics discussed, please contact Linda Poole at

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