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There are lots of sources online that talk about how if you are saving your retirement money within a tax-sheltered account (401k, 403b, etc), you are likely better off with mutual fund investments instead of deferred annuities because annuities typically have higher costs, and because you're already getting the tax savings anyway.

Annuities, of course, do have retirement benefits once they are "annuitized," in that you can guarantee a fixed income stream.

My question: doesn't this suggest that the best option would be to invest in mutual funds within a retirement account, and then right before retirement, transfer all the funds to annuities if that's desired? Why invest in deferred annuities any earlier than that?

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It is not absolutely clear that transitioning all your retirement money from mutual funds, stocks, bonds, CDs etc to an annuity (either now, or just before retirement) is the best decision, especially once you are old enough to have to take Required Minimum Distributions (RMDs). The IRS says in Publication 590

Distributions from individual retirement annuities.
If your traditional IRA is an individual retirement annuity, special rules apply to figuring the required minimum distribution. For more information on rules for annuities, see Regulations section 1.401(a)(9)-6. These regulations can be read in many libraries, IRS offices, and online at IRS.gov.

I would recommend talking to a tax accountant before going your proposed route.

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Make sure you do not buy a variable annuity look for immediate annuity.

Clark Howard has an article Why Variable Annuities Stink

Variable annuities

Right now, the 15 largest insurance sellers of variable annuities are being asked to reveal the expensive perks they offer to salespeople who meet quotas for pushing this junk. Those perks include free cars, vacations, jewelry, cash, etc.

Immediate Annuities

Immediate payout annuities are entirely legitimate, but they have so little in the way of commissions that they're never pushed by salespeople.

  • In a typical immediate annuity (outside of retirement plans), the annuity payments cease upon the death of the annuitant, and the residual value, if any, belongs to the insurance company. Similar amounts taken from a (non-annuity) IRA might well leave a residual amount in the IRA that could be passed on to a beneficiary. So, people in poor health might be better off not buying an immediate annuity at all. – Dilip Sarwate May 11 '15 at 1:38

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