No. of Recommendations: 0
Any kind you want!

Seriously, you can buy a fixed annuity or a variable annuity. Depending on your age, I would probably consider a variable annuity. You get the advantage of a variety of investment vehicles within the annuity. Parenthetically, even the fixed account, which they all have, generally pays more than the rate on a fixed annuity.

Break the money up into several annuities. Hold them in the accumulation phase, not the annuitizing phase. When most variable annuities annuitize they become, in effect, fixed annuities with a very modest interest rate for crediting the annuity. By breaking the money down into smaller pots--at least four--you can make withdrawals from the annuities on a strategic basis. Withdraw earnings, which will be taxable, until you have maxed out the room in a particular tax bracket. Then begin to invade the principal of one of the annuities, or several, which will produce tax free income. This assumes that you are not rolling over your retirement money directly and maintaining its status as tax deferred. If that is the case, then the strategy of splitting the money is less critical.

On the other hand, such a rollover would be in the form of IRAs for which you would have mandatory distributions afte age 70.5. In that instance you might still want to have separate accounts, especially if you might be naming children as ultimate beneficiaries and electing to calculate the minimum distributions over joint lives. By separating the accounts so there would be one which would include each beneficiary child you would be able to make the calculations based on the individual age of each child. With all the children named as beneficiaries on one annuity, the age of the oldest child would determine the minimum distribution formula, and that would caryy over upon your death and determine the distribution to each of the children based on the age of the eldest. Not necessarily a good situation. But I digress.

Variable annuities. Even the conservative fixed account is generally superior to a straight fixed annuity.
Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.