Ask Terry Questions Mutual Funds to Annuities for income?

Mutual Funds to Annuities for income?

By Terry Savage on May 09, 2014 | Financial Planning / Retirement

I have 1 million in the market as Mutual Funds, I use Edward Jones.
I plan to retire soon, should I switch some or most into an annuity plan for regular income per month?
Many thank,

Terry Says:  This is part of a much larger question about your total asset allocation.  Let me say that the person most likely to retire in comfort if you make this switch is the annuity salesman!  You do know there are huge commissions, and a long period of illiquidy, if you do a switch into a tax-deferred annuity that starts a payout several years in the future.  AND, if you choose an immediate payout annuity there are two drawbacks: 1) You are locked into this amount for life (which might not be a good idea if inflation returns) and 2)  If you die, all the remaining money goes to the insurance company, not your heirs (unless you choose to take a smaller payout over two lives, yours and your spouse).

It seems to me that you need some unbiased advice and planning about your total financial picture.  That’s something I can’t do for you, but you might look for a fee-only financial planner at   Or, you can get some terrific advice from the certified financial planners at companies like T. Rowe Price using their retirement income modeling service.  I would contact them, and possibly Vanguard, to just see what they say you should do.  The process involves going through your entire financial situation — not just your investments — to make sure things like estate planning, powers of attorney, taxes, and insurance are part of the total plan.   It is totally separate from what a broker does for you!

Take the time to do this right, get the big picture.  There’s nothing wrong with wanting a guaranteed check for life.  SS will do that for you –and give you a cost of living increase if inflation returns!  (Wait as long as possible to take SS, in your case.)  But all of this must be done in a coordinated way. That’s what true advisors — not salespeople — are there for!



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