Printable checklist for your desk
Print this worksheet to compare your essential spending with your guaranteed income.
Download the PDF (large print)The short version. An income floor is guaranteed income that covers your essential spending no matter what the markets do. Social Security is the largest piece for most people, so the claiming decision shapes the floor. What is left over can be invested with more flexibility. [1, 2]
Step 1: Separate essential from flexible spending
Essential spending is what must be paid whatever happens: housing, food, utilities, insurance, health care, transportation, taxes. Flexible spending is the rest: travel, gifts, dining out. The Bureau of Labor Statistics Consumer Expenditure Survey for 2024 shows all U.S. households spending an average of $78,535 a year, with 33.4% on housing, 17.0% on transportation, 12.9% on food, and 7.9% on health care. These are all households, not retirees, so use them only as a reminder of the categories. [3]
Step 2: List guaranteed sources
- Social Security. The 2026 cost-of-living increase is 2.8%. The average retired-worker benefit is an estimated $2,071 a month after the increase. The maximum benefit at full retirement age is $4,152 a month, for someone who earned the taxable maximum every year, and few people receive it. [1]
- A pension. See Pension: Lump Sum or Monthly.
- Other guaranteed sources. These can include Treasury Inflation-Protected Securities, which adjust principal with inflation, and annuities. An annuity is one option among several, with trade-offs in access, cost, and reliance on the company. See Annuity Education Center and compared with CDs and bonds. [4]
Step 3: Compare the two totals
Worked example (hypothetical). Essential spending of $48,000 a year. Social Security of $36,000 plus a pension of $6,000 gives a floor of $42,000. The $6,000 gap needs to come from savings. Everything above $48,000 is flexible and can come from investments.
How Social Security timing builds the floor
| Fact | What SSA says |
|---|---|
| Full retirement age | 67 for anyone born in 1960 or later. [5] |
| Delaying past full retirement age | Benefits grow 8% per year (two-thirds of 1% a month) until age 70. From 67 to 70 that is about 24% more. [6] |
| Working before full retirement age | In 2026, $1 is withheld for every $2 earned above $24,480. In the year you reach full retirement age, the limit is $65,160 and $1 is withheld for every $3 above it. Withheld benefits are credited back later. [7] |
| Survivor benefits | A surviving spouse may qualify at 60 or older. Payments start at 71.5% of the deceased spouse's benefit and rise to 100% at the survivor's full retirement age. [8] |
| Medicare Part B | The 2026 standard premium is $202.90 a month with a $283 annual deductible, usually deducted from Social Security. [9] |
Our inference, consistent with SSA rules: when one spouse dies, the household keeps the larger benefit, so delaying the larger earner's claim can raise the survivor's floor. See the Social Security guide.
Why the floor matters
Money from a floor does not depend on selling investments in a down market, which is the problem described in Sequence-of-Returns Risk. It also lowers the amount savings need to produce, as shown in How Much Income Can Your Savings Produce?.
Questions for your own floor
- What are my essential expenses, per year, and how sure am I?
- How much guaranteed income will I have, and does it keep up with inflation?
- When should each of us claim Social Security, given the survivor benefit?
- What gap remains, and where will it come from?
- What would I do if the gap grew by 20%?
Frequently asked questions
What is an income floor?
Guaranteed income that covers essential spending whatever the markets do, such as Social Security, a pension, and in some cases annuities or inflation-protected bonds.
How much does delaying Social Security increase the benefit?
The SSA says delayed retirement credits add 8% per year until age 70, which is about 24% more from full retirement age 67.
How do survivor benefits affect claiming decisions?
A surviving spouse's benefit can be up to 100% of the deceased spouse's benefit. Delaying the larger earner's claim can raise the survivor's income.
Sources and review notes
- SSA: 2026 COLA fact sheet
- SSA: Maximum Social Security benefit
- BLS: Consumer Expenditures 2024 (all households)
- SEC Investor.gov: Bonds (including TIPS)
- SSA: Retirement age and benefit reduction
- SSA: Delayed retirement credits
- SSA: Retirement earnings test
- SSA: Survivor benefit amounts
- CMS: 2026 Medicare Part B premiums and deductibles
About this guide. This is general education, not tax, legal, or investment advice, and it is not a recommendation. Historical results do not predict the future. The examples are hypothetical and are not forecasts.