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Ask an Advisor: Should We Move Our Assets Into a Target Date Fund or Choose an Annuity Instead?
Yahoo Financeยท2025-09-09 20:00

Core Insights - The article discusses the financial strategy of an individual with a substantial investment portfolio, focusing on the decision between purchasing an annuity or relying on an investment portfolio for retirement income [3][4][5][6]. - It highlights the advantages of using a target date fund versus a robo-advisor for managing investments, emphasizing the importance of aligning investment choices with personal financial goals and risk tolerance [7]. Group 1: Annuity vs. Investment Portfolio - An annuity serves as a form of insurance that protects against the risk of outliving one's savings, but it may not be necessary for individuals with a robust investment portfolio [3][4][5]. - The individual has a combined pension and Social Security income of $8,400 per month, which would decrease to $6,730 if one partner passes away, providing a reliable income stream [2]. - The investment portfolio includes $1.6 million in a 401(k), $350,000 in Roth accounts, and $300,000 in a taxable brokerage account, offering flexibility in managing income needs [2][5]. Group 2: Target Date Fund vs. Robo-Advisor - A target date fund adjusts its asset allocation to become more conservative as the retirement date approaches, making it a suitable option for retirement accounts [7]. - The article suggests that within tax-advantaged accounts, there is little difference between using a robo-advisor and a target date fund, as both provide diversified portfolio management [7]. - The choice between a target date fund and a robo-advisor should be based on individual goals, risk tolerance, and fee preferences [7].