Your observation is correct, assuming that the "annuity" replacing the bond allocation is a single premium immediate annuity (SPIA).One major omission when comparing to bonds is that an annuity has no value to your heirs when you pass.
But it's not correct if the "annuity" replacing the bond allocation is an "accumulation" annuity such as a multi-year guaranteed annuity (MYGA).
Your comment illuminates a major issue that I have with articles such as these. The term "annuity" encompasses a broad range of products, with distinctly different product features, making it impossible to give a simple answer to the question "are annuities a better fit for the three-fund portfolio?"
It would have been better if the article zeroed in on a particular type of annuity. And I would have answered "yes" to the question if it was framed as "are MYGAs a better fit...", and "no" if the question was framed as "are SPIAs a better fit...."
Statistics: Posted by Stinky — Sun Dec 08, 2024 7:24 am — Replies 9 — Views 973