Floor and Enjoy.
Build your retirement income plan.
The Floor and Enjoy strategy separates guaranteed income (the floor) from invested assets (the enjoy). Calculate your floor gap, how much portfolio it takes to fill, and what remains for growth.
US-only. Annuity rates and Social Security are US references. Other countries use different mechanisms.
Worked example: Essential expenses $4,500/mo. Social Security $2,200/mo. Floor gap $2,300/mo ($27,600/yr). At a 6% SPIA payout: $460,000 to fund the floor. Portfolio $800,000. After floor funding: $340,000 for the "enjoy" portion. This $340,000 can ride out market downturns because essentials are already covered.
Methodology: left bar shows monthly guaranteed-income sources stacked. Right bar shows portfolio dollars split between floor coverage and discretionary enjoy.
How this tool works
- Floor gap = essential expenses - guaranteed income. If guaranteed income exceeds essential expenses, your floor is already covered.
- Portfolio to fill floor = (annual gap) / (SPIA payout rate). At a 6% SPIA payout, $1,000/year of guaranteed income costs roughly $16,667 in lump sum.
- Enjoy portfolio = total portfolio - portfolio needed for floor. This is the discretionary growth allocation.
- SPIA payouts vary by purchase age, gender, current interest rates, and insurer. The default 6% is a rough average for someone in their late 60s or early 70s. Get an actual quote before committing.
- The Floor and Enjoy framework comes from retirement researcher David Blanchett verify×DON'T TRUST, VERIFYClaim: The Floor and Enjoy / floor-and-upside framework is documented in retirement-finance research, including work by David Blanchett.Verify at: Boston College Center for Retirement Research ↗ · Blanchett (2014) "Exploring the Retirement Consumption Puzzle" ↗The two-bucket / floor-upside framework has academic precedents in lifecycle finance..
- This calculation does not adjust for inflation. SPIAs typically pay a fixed nominal amount unless you buy an inflation-adjusted variant (which has lower starting payouts).
- You do not have to actually buy a SPIA to use this framework. The "portfolio needed for floor" is a planning anchor; you can fund the floor with a TIPS ladder, a bond ladder, or a more conservative withdrawal rate from the equity portfolio.
Not financial advice. Annuity rates change frequently. Get current quotes before relying on the floor calculation.