The short answer
There is no universal right percentage, but a common principle is that you should not put all of your savings into an annuity, because doing so sacrifices liquidity and flexibility. Many planning approaches suggest annuitizing only enough to cover essential expenses that other guaranteed income, like Social Security, does not, while keeping the rest of your portfolio accessible and invested. The right share depends on your income needs, other guaranteed income, health, and comfort with giving up access to the money.
So the sensible framing is to annuitize a portion sized to your essential income gap, not your whole nest egg.
How to think about the share
One approach is to add up your essential expenses, subtract guaranteed income you already have from Social Security and any pension, and consider covering part or all of the remaining gap with an annuity, leaving the rest of your portfolio for growth, flexibility, and legacy. This keeps a safety margin of accessible money. Our guide to annuity vs. bond ladder covers alternatives for the income piece, and our retirement income guide covers the overall plan.
The essential-expense gap after existing guaranteed income is a useful anchor for how much, if any, to annuitize.
Why not annuitize everything
Putting all your money into an annuity leaves you without accessible funds for emergencies, large one-time expenses, or a legacy, and concentrates risk in a single insurer. Keeping a meaningful share liquid and invested preserves flexibility. Because the right balance is personal and the decision is largely irreversible, work with a licensed professional. This is educational information, not a recommendation.
The takeaway: consider annuitizing only the portion needed to cover essential expenses beyond your other guaranteed income, keeping the rest accessible — and decide with professional guidance.
Frequently Asked Questions
How much of my portfolio should go into an annuity?
There is no universal figure, but a common principle is to annuitize only enough to cover essential expenses beyond your other guaranteed income, keeping the rest accessible and invested.
Should I put all my savings into an annuity?
Generally no. Doing so sacrifices liquidity for emergencies and legacy and concentrates risk in one insurer. Keeping a meaningful share liquid and invested preserves flexibility.
How do I decide the right annuity share?
Add up essential expenses, subtract existing guaranteed income like Social Security, and consider covering part of the remaining gap. Because it is personal and largely irreversible, decide with a professional.
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