How Much to Annuitize

This forum topic is a continuation of a good question/comment that can be found here:

The answer depends on a number of factors, according to the person who is probably the leading expert in the industry (Moshe Milevsky), the answer depends on one's level of spending in retirement and bequest motive.

The correct amount creates an optimal balance between two competing objectives: 1) creating a level of sustainable income in retirement, and; 2) bequest motive or leaving a financial legacy for heirs. 


Age 62, retiring with house and car paid off, $400k to invest. Zero bequest motive. No dependants or heirs. I'm considering $200k in fixed, immediate lifetime annuity, the remainder in 3 or 4 conservative monthly income funds, hopefully returning at least 5% per year. Inflation can be countered by 1) Social Security increases, 2) buying another $100k annuity in 10 years, 3) reverse mortgage some day.

Is that a reasonable balance?

First, do you have any sort of handle on what your desired level of spending will be in retirement? Determining this is step 1 and step 2 involves analyzing how realistic and sustainable that objective is.

Any other sources of income--for example, defined benefit pension?

Any thoughts about when you might begin to take Social Security?

Any health issues on the horizon? In other words, how does general longevity picture look based upon family history, etc (by the way, please keep all sensitive info either completely anonymous or offline)?

Why are you considering a 50% allocation of investable assets into fixed immediate annuity at the moment?