Wow when I read the initial post I expected to see a lot of negative backlash on annuities.
For the most part everything i've seen says annuities are a no-no. You're locked into a return that is usually lower than you can do on your own with a balanced index fund, and you're at risk that the provider of the annuity goes belly up. As I understand it, annuities are not "insured" in any way.
I would suggest this:
Do a budget for your expenses while sitting around and/or job hunting, this should be different from your existing budget - lower. Determine the maximum time you think you'll be looking for a job. Multiple by budget. Reserve half of that cash in your checking account.
Roll over your 401k to a good financial supermarket. I think most people here use Vanguard as I do. Cheap, lots of investment choices, nice web site, easy to deal with. I've had good customer service with them.
If you want to wait a while and self-educate, I think most agreed in another thread that a good parking place for cash is the vanguard short term corporate bond fund. If you want your money to be 'engaged' now while you learn the ropes, you can do a lot worse than one of the vanguard "target retirement" funds, or one of their "lifestrategy" funds. One of their standard balanced index funds is also a fine choice and I believe used by several here.
The "target retirement" funds are pretty simple: pick the year in which you're planning retirement and buy that fund, for example "target retirement 2005" if you're planning on retiring next year. Each of these funds autobalances each year to reduce risk and increase income, moving from a stock heavy portfolio to bond heavy over time. You do nothing except look at it when you feel like seeing what your money is doing.
The "lifestrategy" funds give you more hands on. There are a peck of them, from "income" to "aggressive" funds. Each shows you their allocation of stocks and bonds. The riskier funds have higher chance of return (and loss). The allocations never change, so you move your money from one lifestrategy to another when you feel its appropriate.
The "Balanced Index Fund" simply holds 60% stocks and 40% bonds, of varying sizes and types. This is the "standard allocation" many financial planners start people on. It charges a very low management fee.
Lastly, one favorite pick of mine is the Vangard STAR fund. The STAR fund is a "fund of funds". You put a clump of cash into it and vanguard invests that in a dozen or so of their diverse funds, from stock to bond to international. Its a nice diverse mix that should experience reasonable volatility and give a nice return. It charges less than a half of 1% for fees, which is pretty cheap considering the sophistication of the investment instrument.
If you're not going to vanguard, two balanced funds that charge fairly cheap rates and are buyable at almost any broker or financial service firm are the Oakmark Balanced (OAKBX)and Dodge and Cox Balanced (DODBX). Both have performed well over time, including the rough patch over the last 4 years. Good management, long track records, neither company is currently "in trouble" with the feds for the fund scandals. All in all you can find worse places after looking a long time. There is not a lot of overlap between the two in terms of top stock holdings, so you can buy both to diversify further.
What I would suggest is rolling your 401k to the vanguard IRA and use the target retirement fund corresponding to the nearest year to your "true" retirement between 59-65 for that. If you keep half the job seeking budget in cash, put the other half into the short term corporate bond fund, where it will at least stay ahead of inflation and its fully liquid. The remainder of your lump sum into the vangard balanced index.
Then go read all the books that are suggested.
Disclosure: all my money is at vanguard. Amazingly, I own absolutely none of the funds I mentioned although I've owned DODBX and OAKBX previously and been well served by them.
