Annuities vs. Bonds for Retirement Income

Key Takeaways

• Bonds can provide income, but they may be less efficient than dedicated income solutions in retirement.
• Commission-free annuities may generate more income per dollar than comparable bond allocations in some cases.
• Income efficiency can help retirees meet spending needs with less capital.

Bonds have long been used to provide income, but in retirement they may be less efficient than alternatives designed specifically for income generation.

Commission-free annuities can often generate more income per dollar than bonds, meaning it may take less capital to fund the same income need. That efficiency can be especially valuable over long retirements.

By shifting part of a fixed-income allocation toward income-focused tools, retirees may improve predictability without increasing risk exposure.

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Disclosures:

This material is provided for educational purposes only and does not constitute investment, legal, tax, or insurance advice. It should not be relied upon as a recommendation to purchase, sell, or exchange any security or insurance product. Investors should consult their financial, tax, and legal professionals before making financial decisions.

Annuities are insurance products issued by insurance companies. Guarantees are subject to the claims paying ability and financial strength of the issuing insurer. Product features, limitations, fees, surrender charges, and availability vary by contract and carrier.