Should We Shift Assets to a Target Date Fund or an Annuity?

Article excerpt

A 66-year-old investor with $1.6 million in retirement savings faces a common dilemma: should they move assets into a target-date fund designed to de-risk automatically as they age, or lock in guaranteed income through an annuity? Target-date funds offer simplicity and flexibility, adjusting their stock-bond mix over time without requiring action. Annuities provide income certainty and can't run out, but sacrifice liquidity and often come with high fees. The choice hinges on personal factors, how much income they actually need, their health prospects, and tolerance for market volatility in retirement.