Annuity for Part of Retirement

How much does he make on it?

that is the first question to ask

I would have no problem with putting some of my non-qualified assets into an annuity at retirement. What's the downside of creating an additional, tax advantaged, guaranteed pension for yourself? I know that there are some annuities out there that benefit the insurance company more than the owner of the annuity but I believe that some annuities, used with discretion can be beneficial.

My situation is similar to yours. I have a couple of annuities set up with American Equity. The guaranteed payout rates are 4.4% and 4.6%. They include a "well being" clause (at least I think that's the term) to help cover home or institution health care. It's not sexy, but think of it as backup in case I need to draw on the income.

As with many things, there are good and bad - the only thing I will suggest you to consider:

Why are there so many folks selling annuities and at the same time so many companies advertising ways to get you out of one?

If I needed a "no shite" minimum return on the buy in, an annuity (as long as the costs are reasonable) wouldn't be the worst option. In your case, I would consider a bucket of dividend stocks or tax free munis, something that allows you to retain/recapture some measure of control AND liquidity, particularly as it is supplemental income.

In the alternative, leveraging $1m in revenue generating real estate or some other tangible asset can keep you busy and provide some tax advantages, particularly if you project to have a long retirement window.

Annuities are life insurance policies that provide an income for life. It's that simple. Much like a dependence on a pension and SS, the annuity brings the same reliability. It's a solid financial instrument for many people.

All annuities offer different benefits so know what you seek and be satisfied.

To those who have never run a calculation of earnings for brokerage or investment advisors, stop with the ignorance. Everyone in financial service earns an income based on deposited or growth values.

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he is telling me I should put $1 mil in a guaranteed annuity.

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Nope

i bought two a few years back when retired...

basic rec is ...add ss and annuities to cover your required living expense.

then do a mix of stocks bonds real estate for surplus spending and inflation..

i bought two immediate fixed income ones through fidelity...new york life and gaurdian...
get about 5.15 percent ...and get checks every month for rest of my life and if i die my wife gets the same amount check until she dies. if we both die before they pay out my initial investment they will pay back unpaid portion to my kids...

they are not backed by feds but each state has some backing which is why they ask were you live..texas backs 250k per company..so in texas break the milion into four ... with your other annuities (ss and retirement a million is on the high side) start with 250-500k

do you not like buying corp bonds??? i have a lot of those and average 4 ish on that bucket and a mix of high yield big cap dividend stocks (5-10 percent) i treat those like bonds ..and then a different equity bucket ( to address inflation..the dividend for the equity funds are about 2 percent and all i would take from it...any growth over that us for inflation which is not in my annuities i bought) ..and real estate bucket pulling in over 5percent)

fidelity has a bunch of research and model stuff on this topic in their website...

It is correct bc these products provide an inherent conflict of interest (including and especially indexed annuities) that lots of times can’t be steered away from by the advisor since it’s the only damn thing they can offer.
Just like with whole life Insurnace argument as well, when all you have is a hammer, everything looks like a nail.

But back to my point, a client needs to understand the difference of being in a well diversified portfolio and paying 1% per year as a fee or locking in half their net worth into a fixed product, and paying $60,000 in commission to someone for a product that they likely can never get out of.

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It is correct bc these products provide an inherent conflict of interest (including and especially indexed annuities) that lots of times can’t be steered away from by the advisor since it’s the only damn thing they can offer.

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I'm sorry that you disagree, but it is the truth that the markets are in a constant war with insurance over the money. There is no conflict of interest because of the application of "interest". Interest earned can be applied by any means agreed, and use of the index returns pokes the market bear where it makes them upset. Fixed annuities offer guarantees that markets cannot, and are overseen by 50 state's commissioners, something that investment banks do not have (they have self-oversight and self-regulation).

Your steering remark is interesting in as much as it can be said the same for the investment advisor who doesn't offer anything other than risk.

The OP can consider using fixed annuities for a portion of his retirement income. It would be a terrible outcome if OP took a 30% loss on market holdings during retirement distribution. Buffer assets are valuable. Not knowing more than OP states, I don't comment on the amounts. There is no absolute.