Do I Need an Annuity—and How Much Should I Allocate?

One of the most common questions we hear is: Do I need an annuity? And if so, how much of my money should go into one? Today, let’s walk through how to think about that.

The reality is simple: everyone’s situation is different. Some people may want nothing in an annuity. Others may choose 10%, and some may allocate as much as 50%. It all depends on your foundational income needs and your comfort level with risk.

The Role Annuities Can Play in a Portfolio

Once you start thinking about how much to allocate, the next question is what kind of annuity makes sense.

There are several options:



• Variable annuities
• Immediate annuities
• Fixed annuities
• Fixed indexed annuities

The right choice depends on your income needs, risk tolerance, and growth expectations. The focus here isn’t just growth potential—it’s the income guarantees.

With an immediate annuity, you give up control of a lump sum, and in exchange you typically receive higher guaranteed income. That income may or may not pass on to future generations unless it’s structured a certain way.

With fixed or variable annuities, you can add income benefit riders (usually for an additional fee). These riders can provide guaranteed income, more money potentially passing to heirs, and some ongoing control over account value.

Variable annuities also participate in market ups and downs, offering growth potential—but with added risk. Ultimately, it comes down to balancing what you want on the income side and what you want on the outcome side.

Risk Tolerance Matters

Some retirees already have their income needs covered through Social Security, pensions, or other sources, but still have a sizable amount of money they don’t want fully exposed to market volatility.

For people who dislike the idea of losing money—especially in retirement—annuities can feel more comfortable. You may be fine spending your money, but you don’t want the market spending it for you. In those cases, a larger annuity allocation can make sense, especially when it offers growth opportunities with less risk.



On the other hand, some people have no fear of the market. As long as their foundational income needs are met, they’re happy to stay invested. That’s one of the powerful ways annuities can be used: cover your essential income first, then invest with more confidence. When you don’t have to worry about how your basic needs are being paid for, market ups and downs become easier to tolerate.

Determining the Right Percentage

So how do you figure out what percentage should go into annuities?

It comes down to outcome-based planning and your unique situation. You need an income plan that’s built around:

• Your specific income needs
• How those needs should be positioned
• How each portion of your assets should be allocated to support that plan

There’s no one-size-fits-all answer—only what’s right for you.

If you found this helpful and want guidance on how annuities may fit into your own retirement plan, we’d love to help. Schedule a strategy session with The Annuity Guys to build an income approach tailored to your goals—no pressure, no strings attached, just honest, unbiased guidance to help you confidently make the right decision for your retirement.

Thanks for reading, and here’s to building a retirement plan you can feel confident about.

Annuities are long term retirement income vehicles and are not suitable for everyone. They involve fees and charges, including possible surrender penalties. Optional riders may involve an additional annual fee. Product and feature availability may vary by state.

Annuity withdrawals are subject to ordinary income taxes, including a potential 10% IRS penalty if taken before age 59-1/2. All guarantees are backed by the financial strength and claims-paying ability of the issuing company, and for variable products, do not apply to the performance of the variable subaccounts which will fluctuate with market conditions. Investing involves risk, including possible loss of principal. No investment strategy can ensure a profit or guarantee against losses.

Eric Judy offers advisory services through Client One Securities, LLC, an Investment Advisor. Annuity Guys Ltd. and Client One Securities, LLC, are not affiliated. Licensed insurance professional. We are not affiliated with any government agency, and do not provide tax or legal advice.



Investment advisory services are provided in accordance with a fiduciary duty of care and loyalty that includes putting your interests first and disclosing conflicts. Insurance services have a best interest standard which requires recommendations to be in your best interest. Advisors may receive commission for the sale of insurance and annuity products.

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¹ Goldman Sachs Asset Management, 2025 Retirement Survey & Insights Report: New Economics of Retirement, October 2025. Survey of 5,102 working and retired Americans conducted July 2025. Available at: https://am.gs.com/en-us/advisors/insights/report-survey/retirement-survey

² Goldman Sachs Asset Management, 2025 Retirement Survey & Insights Report, October 2025. The 7.1% payout percentage is the average of the top 5 highest-paying single premium immediate annuities starting at age 65, averaging male and female rates, calculated using major retail annuity providers' offerings at May 2025 rates. The 23% income boost is calculated by comparing a blended withdrawal rate (30% SPIA at 7.1% + 70% traditional at 4%) to a traditional 4% withdrawal rate. Available at: https://am.gs.com/en-us/advisors/news/press-release/2025/retirement-survey-press-release