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Portfolio > Portfolio Construction

Boost the retirement income portfolio

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Asset allocation is a hot topic in retirement planning. Stocks. Bonds. Annuities? Yes, annuities, according to a MassMutual study that sought to find what role fixed income annuities can play in boosting Americans’ retirement income portfolios.

Using the timeframe from 1980-2006, MassMutual tested four hypothetical accounts, all with $100,000 and designed to produce the same initial $10,597 level of annual retirement income for those 27 years. The results were as follows:

  • Account A: 50 percent U.S. equities and 50 percent U.S. bonds – had a liquid value of $489,346 at the end of the 27- year study period.
  • Account B: The same 50/50 allocation as Account A, except that at the start 33.3 percent of the bond portion of the account was used to purchase a life-only fixed income annuity – had a liquid value of $667,688.
  • Account C: 50 percent U.S. equities, 30 percent U.S. bonds, 20 percent initial purchase of a life-only fixed income annuity with additional fixed income annuity purchases in the second year through the seventh year – had a liquid value of $735,292.
  • Account D: Same initial asset allocation as Account C, but the payout method for all the fixed income annuity purchases is life with 20 years certain – generated more than five times the original deposit in liquid value, $546,200.

“Stocks, bonds and fixed income annuities working together can help create a plan that delivers a combination of lifetime income security and asset growth potential,” says Jerry Golden, president of MassMutual’s Income Management Strategies Division. “Advisors will play a critical role by helping clients choose and continually adjust the mix of classes, guiding the timing of periodic purchases of fixed income annuities, and addressing their client’s beneficiary needs.”

For more information on the study, visit


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