Annuity laddering is a strategy used to create automatically increasing lifetime income for retirement with scheduled raises occurring at pre-determined intervals.  Annuity laddering strategies are often used as part of a retirement income and preservation of principal planning strategy. It involves purchasing multiple annuities that grow at very healthy deferred rates (usually contractually guaranteed by the underlying insurance company), and then begin paying lifetime income at different times or intervals (that you get to choose), creating a staggered income stream that continues to increase throughout retirement. The goal is to match income with future financial needs while reducing exposure to interest rate fluctuations and improving overall cash flow.
 

Here’s how it works:
 

1. Multiple Annuities: Instead of buying a single annuity for the entirety of retirement, laddering involves purchasing several annuities that start paying income at different intervals (e.g., one starting in 5 years, another in 10 years, etc.).
    

2. Diversified Timing: Each annuity provides a guaranteed income at a different point in the future, potentially addressing future inflation, healthcare costs, or changing living expenses through scheduled raises to income.
    

3. Risk Mitigation: Laddering can help reduce the risks associated with locking in a single annuity income rate for life, especially if interest rates are low when purchasing the annuity. By staggering the activation of each income stream, the strategy aims to capitalize on compound growth during the deferral of each leg while providing a retiree with unparalleled predicability, enabling them to know ahead of time exactly how much income they can expect all throughout their lifetime - regardless of market conditions/performance.  
    

4. Flexibility and Control: It also allows the individual to adjust to changing circumstances over time, since some annuities will begin paying out at different stages, providing flexibility to adapt to life's uncertainties.
    

Overall, annuity laddering is a way to create a more adaptable and resilient income plan over the course of retirement.​