An annuity in the 3 fund portfolio?

[FloridaJim57]

The traditional three fund portfolio is a bond index fund, and a domestic and international stock index fund. Do you think an immediate annuity would be a good substitute for the bond fund?

 

[TheWizard]

The traditional three fund portfolio is a bond index fund, and a domestic and international stock index fund. Do you think an immediate annuity would be a good substitute for the bond fund?

No.
An immediate annuity might be a good idea but has nothing to do with the AA of your remaining portfolio...

 

[pb4uski]

No. If you need cash flow it might be something to consider but not as a substitute for a bond fund.

 

[DrRoy]

No on the annuity. I have very little international stock either, much to my benefit for the last 30 years.

 

[MikeTN]

Annuities do have a role for many of us. I'm 81 and happy that I annuitized a portion of my "safe Money" with TIAA. I recommend you read the Morningstar paper, "The Retirement Plan Lifetime Income Strategies Assessment", published online in 2022. The obvious advantage is that you can't outlive the income stream (unlike a bond ladder), the price is that you will have a smaller legacy if you die early. I figure my kids will have quite a nice IRA stash of equities and bonds if I die early, and I will appreciate the annuity if I live an above average number of years. The Morningstar researchers suggest that if your assets are more than 36 times your expected expenses in retirement then you don't need an annuity. [Because you are so unlikely to run out of money in old age] For the rest of us it makes sense to me to put part in an annuity.