Ask an Advisor: Is 50% Too Much? My Advisor Wants Me to Load Up on Annuities

Brandon Renfro, CFP®

Thu, Mar 6, 2025, 8:00 AM 7 min read

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My advisor is recommending putting implicit 50% of my portfolio successful annuities. What accidental you?

– Georgia

As with astir idiosyncratic concern decisions, a batch hinges connected the circumstantial details of your situation. Fifty percent would apt beryllium connected the precocious broadside for astir people, but that doesn’t mean it can’t beryllium the close magnitude for you. Some whitethorn adjacent privation oregon request a larger information of their portfolio successful an annuity.

Let’s speech astir the reasons you whitethorn privation to enactment that overmuch into an annuity, and the reasons idiosyncratic whitethorn not privation to. Compare these items to your ain situation, goals and preferences and determine if 50% is the close amount.

Consider utilizing this escaped tool to lucifer with a fiscal advisor if you are funny successful getting customized proposal based connected your circumstances and goals.

Guaranteed income is the cardinal crushed to bargain an annuity. While determination are many types of annuities, an contiguous annuity is the simplest and astir straightforward variation. With a beingness contiguous annuity, you speech a lump sum of wealth for a bid of regular monthly payments. Much similar a pension oregon Social Security benefits, beingness contiguous annuity payments past for the remainder of your life.

With that successful mind, let’s spell implicit immoderate of the main benefits of buying an annuity. The much these benefits entreaty to you and marque consciousness wrong the discourse of your financial plan, the larger your allocation toward an annuity whitethorn be.

When you person income from an annuity, you don’t person to interest astir outliving your savings, which is simply a important interest for galore retirees.

When considering however overmuch of your portfolio you privation to allocate to an annuity, deliberation specifically astir however overmuch guaranteed income you request to screen your surviving expenses. This is known arsenic an income floor. That way, if the marketplace is mediocre and your investments don’t execute well, you tin trust connected that income level to get you through.

However, if your Social Security benefits and/or pension payments already supply capable income to screen your surviving expenses, much guaranteed income whitethorn not beryllium necessary. (But if you request an adept to measure your status income program much closely, see matching with a fiduciary advisor.)

A fixed annuity, meanwhile, pays a guaranteed involvement complaint careless of however the banal marketplace performs. Once your payments begin, they aren’t taxable to the volatility of marketplace fluctuations successful the mode that stocks, bonds, communal funds and ETFs are.