Fixed Annuities -- Perspectives from people who have them
Recently met with a financial advisor at Fidelity my 401k (from a previous employers) is. She ran a couple simulations that showed if we kept our retirement money only in a 401k we would run out of $ when I was in my early 90's. Whereas, if we put assets from my 401k into a fixed annuity, we would not run out of $ during retirement and there would be a small amount of assets (from 401k) that our heirs would inherit (these simulations assuming below market returns and both myself and my spouse would live to late 90's). I've done research online into the pros and cons of fixed annuities but wondered if anyone who has a fixed annuity can chime in whether they are happy with their decision to obtain one and if they had to do it again would they make the same decision. I'm still 10ish years from retirement.
Parent Replies
Short answer is yes I have one and I’m happy with my decision.
Long answer-there were so many things that weighed into my decision. What are my streamed of income for retirement (401k, ROTH IRA, SSA)? What if right when I fully retire, the market changes and I lose a fair amount from my 401k/ROTH IRA? (Like what happened to the folks in 2008 or 2020 after COVID hit?) Do I want a guaranteed income (mine has inflation adjustments every 2-3 years)? I did NOT use all of my 401k (from a rollover, when I left a previous employer), just a portion. And I also have a good understanding of my emotional capacity to tolerate market risk. If I didn’t have someone who walked me through this last point, I would not have fully understand where my anxiety about running out of money was coming from.
Basically, FIA work for some folks and aren’t necessary for others.