Reduce taxes, rebalance, generate safe tax-deferred income and create your own pension if you’re nearing retirement
MEDFORD, OR / ACCESS Newswire / March 10, 2026 / The beginning of the year is a great time to make sure your savings and investments are aligned with your goals, are tax-efficient, and do not expose you to excessive risk, says retirement-income expert Ken Nuss, president of AnnuityAdvantage.
Check your asset allocation and rebalance if necessary. An asset allocation plan sets the percentages you put in equities (stocks or stock funds) and in fixed income, which includes savings accounts, money markets, CDs, bonds and fixed-rate annuities.
“If you’re overinvested in one area, such as equities, because of the rise in the stock market, you should rebalance to achieve your desired asset allocation,” he says.
If you decided to keep 55% in equities and 45% in fixed income a few years ago, now, thanks booming stock market, your allocation may stand at, say, 65/35. It’s time to rebalance.
Additionally, as you approach retirement, your optimal asset allocation may change, with less money in stocks and more in guaranteed safe investments. Once you’re retired and begin withdrawing your savings and need income to replace your wages, you’ll likely want to become even more conservative.
“Sticking to your asset allocation decreases excessive risk and prevents you from buying high and selling low,” Nuss says. When the stock market falls, you’ll be less tempted to sell everything because you’ll also have a solid cushion of fixed assets. Many people without a plan panic and sell their stock funds at exactly the wrong time, when the market is at a low point.”
The right asset allocation is individual. Besides your age and expected income in retirement, your psychology is important. Some people are risk-averse; some don’t mind the ups and downs of the stock market too much.
Figure out how much income you’ll need in retirement. This becomes especially germane in your 50s and 60s. Many people can calculate it themselves using a retirement calculator on the web. Searching for “retirement income calculator” will give you several choices, Nuss notes.
Once you’ve got an estimate, you can start structuring your savings and investments to produce the necessary income. While savings accounts and stocks can produce income, the income stream they produce varies.
Only three things can offer a guaranteed lifetime income: a traditional employer-provided pension (which is rarer now), Social Security or a lifetime income annuity. The latter allows you to create your own pension by converting a portion of your savings to a stream of guaranteed income. It serves as longevity insurance.
Review your 2025 federal and state income taxes and look for savings opportunities. If you’re holding all or most of your savings in taxable accounts, you can reduce your taxable income by moving some money to tax-free and/or tax-deferred accounts.
Contributing to tax-deferred retirement accounts, such as a 401(k) or a traditional IRA, or to a tax-free Roth IRA, is the first line of defense. If you can afford to set aside additional money for the long term, consider also purchasing a deferred annuity. Annuity interest is not taxed as long as it’s reinvested in the annuity and not withdrawn. Since withdrawals of annuity interest before age 59½ are normally penalized by the IRS, most people don’t consider annuities until they’re in their 50s.
Deferred annuities come in several flavors. Fixed-rate deferred annuities act much like a tax-deferred version of a certificate of deposit (CD), but they are issued by insurance companies rather than banks and are not covered by the FDIC. They now pay a great rate.
Fixed indexed annuities provide market-based growth potential plus guaranteed principal, and variable annuities let you participate in the stock and bond markets but put your principal at risk.
Compare alternatives for safe, reliable income. When reinvesting money from maturing certificates of deposit or bonds, don’t automatically re-up. You may get a better rate elsewhere. Money market accounts, bank certificates of deposit and bonds now pay reasonable rates. But you may be able to do better, Nuss says.
Long-term bond funds can be especially volatile. Many people who choose bank CDs by default can get a higher rate with a fixed-rate annuity. Also known as a multi-year guarantee annuity (MYGA) or a CD-type annuity, it acts much like a bank certificate of deposit. Like a CD, it pays a guaranteed interest rate for a set period, usually two to 10 years. Unlike CD interest, annuity interest is tax-deferred until withdrawn.
Both principal and interest are fully guaranteed by the issuing insurance company. Although state regulators monitor the financial strength of insurers, they are not covered by federal deposit insurance, so it’s wise to check the insurer’s AM Best financial rating. Fixed annuities let you reinvest interest earnings without risk because reinvested proceeds earn the same rate as the base annuity, guaranteeing the yield for the term.
Deferred annuities are tax-deferred. All interest earnings left inside them compound tax-deferred until withdrawn. You can wait until retirement, when your tax bracket is likely to be lower, to start taking withdrawals.
MYGAs do have less unpenalized liquidity than bond funds. You can always cash them in, but you may pay a fee for an early surrender. Because annuities are less liquid than bond funds, you probably wouldn’t want to put all of your fixed-income investments in them.
But there is typically some liquidity. Many fixed annuities let you withdraw up to 10 percent a year penalty-free. They’re thus more liquid than most CDs, which often have penalties for early withdrawals of any amount.
Consider a lifetime annuity to create your own pension
With a lifetime income annuity, you pay an insurance company a lump sum, which it converts into a stream of income guaranteed for life. You’re creating your own private pension. You can choose either immediate payments (immediate annuity) or defer them until a future date you choose (deferred income annuity).
If you’re married, you can choose an option that will protect your spouse. With the joint-life option on a lifetime annuity, payments will continue as long as one spouse is alive.
“I’m a big advocate of lifetime annuities, but anyone considering one should realize that you no longer have access to your principal once you commit. However, if you can afford to tie up some of your savings, they can be a great option,” Nuss says.
Make sure your beneficiaries are up to date. The listed beneficiaries on annuities, life insurance policies and retirement plans will receive the proceeds on your death, regardless of what your will says. Marriage, divorce, the birth of children or grandchildren and the death of a loved one may require updating your beneficiaries.
If you’re married, your spouse is normally your primary beneficiary, and your child or children are contingent beneficiaries. But if you’ve been divorced and remarried and your ex-spouse is still listed as the beneficiary, the proceeds will go to him or her.
There’s never a bad time to review your finances and investments, but the start of the year is an especially good time to do it because you’ll have the data from the previous tax year to help guide you.
Ken Nuss is the founder and CEO of AnnuityAdvantage, a leading online provider of fixed-rate, fixed-indexed, and lifetime income annuities. Ken is a nationally recognized annuity expert and widely published author. A free rate comparison service with interest rates from dozens of insurers is available at www.annuityadvantage.com or by calling (800) 239-0356. The firm also offers an income-annuity quoting service. There are no fees or charges for the firm’s services; 100% of the client’s money goes to work for them in their annuity.
News media contact: Henry Stimpson, Stimpson Communications, henry@stimpsoncommunications.com
SOURCE: AnnuityAdvantage
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