Good job Walter! In this vivid example, Walter Updegrave explained why annuity is not a good choice for the retired man in this situation. In short, annuity is not a one-size-fits-all solution for all people in retirement.

Getting back to your situation, if you're thinking about a deferred annuity as a way to insulate yourself from the market's ups and downs, then I don't think an annuity is a very good idea. For one thing, you don't need the tax deferral that annuities offer. You already get that within an IRA, and putting an annuity within your IRA would offer no additional tax benefit. More importantly, though, deferred annuities just have too many fees, expenses, complications and pitfalls. For example, most have surrender charges that can penalize you heavily for early withdrawals, although "early" may mean within 10 or more years.

So if what you really want is some shelter from a market setback, I'd suggest re-evaluating your mix of stocks and bonds, shifting more toward bonds and cash. I wouldn't overdo it, though, because at age 60, you're probably looking at another 25 to 35 years of life. You'll need some capital growth if you want your purchasing power to stand up to inflation.