For a lifetime annuity purchased in a taxable account, the purchase cost is amortized over 360 months for under 56, 310 months for 56-60,
260 months for a 61-65 year old, 210 months for 66-70, and 160 months for 71 and older. That will reduce the taxes from the annuity.
-- Ron
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Some people might put a portionof their savings (say 1/3) in annuity to generate baseline living expenses and invest the rest more aggressively.
Annuities pay slightly more than 30-year treasuries (6%) if you are under 60, then increase with age.
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I think your details suggest you have the accumulation aspect of retirement planning down.
I second the advice to get a will.
I would look at the following aspects to improve situation:
1) Make sure you have 6-12 months expenses in cash (emergency fund)- I did not see this mentioned.
2) You need to start thinking of withdraw techniques. This has tax implications on many levels and over the next 5-10 years this might suggest what you buy or invest in.
3) I would make sure you have a good handle on retirement expenses. Will travel increase? Will spending increase? Health care costs? Moving?- if so will property taxes and maintainence change?
4) 2) and 3) kind of go hand in hand. Withdraw techniques can suggest how much you need to save, the budget suggests how much earnings you need from investments each year. If you chose to live off dividends alone (a good early retirement plan- as dividends tend to keep up with inflation), you might want to increase what you send to the DRIPs now, as well as liquidate some of the company stock for this as well.
5) If you chose a more conservative allocation going forward, I would advise to use muni bonds because of 28% fed tax rate and I assume a high amount of state taxes too.
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The OP has a $500,000 non-retirement account so he doesn't need to have 6-12 months of cash for emergencies since some brokerages allow one to borrow against that type of account. The OP could also sell those funds that aren't depressed and have a large tax impact.
-- Ron
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