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Jared is attracted to the favorable terms of the annuity plan that his employer offers, but he’s hesitant to pay the opportunity cost of locking up his money now. What should he do?
An anonymous caller is struggling to find the efficient frontier with only three funds to choose from in his Thrift Savings Plan. Is there any hope for him?
Jack feels great about the funds in his portfolio, but he’s losing sleep over how to apportion them between his taxable, pre-tax and Roth accounts. What’s the best tax strategy for him?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
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Jared asks (at 1:41 minutes): Is it wise to lock up part of my portfolio now in exchange for guaranteed income decades down the line?
I’m 45 with a net worth of $1.5 million and a 92 percent allocation to stocks. I’ve been comfortable with the risk—didn’t panic-sell during the Spring 2025 volatility—and I haven’t felt the need to shift gears… until now.
While looking into diversification options, I came across TIAA Traditional, which is offered through my employer. I understand this as a two-part product. First, I contribute now and receive a guaranteed minimum return of three percent, but in practice it’s often four to six percent.
Then, later in retirement, I can convert that into a fixed income annuity—with an 8 percent conversion rate based on historical averages. TIAA seems well-regarded, and the guaranteed income appears more generous than what’s typically available from other providers.
Still, this isn’t your usual volatility-reduction tool like a bond fund. And while some guests on this podcast have spoken positively about the role of annuities in retirement planning, this is more complex than a straightforward annuity product.
So I’m wondering: should I invest in this now, locking in favorable terms and guaranteed income for the future? Or should I stay flexible, keep investing in growth-oriented assets, and consider an annuity closer to retirement—even if the terms aren’t as attractive down the line?
How should I think through this decision?
Jack asks (at 18:06 minutes): My wife and I feel good about our asset allocation, but we’re getting tripped up on our asset location. Between a taxable brokerage, pre-tax or Roth account, how do we figure out which fund is best suited for each account?
We only invest in three main funds: domestic stocks through Vanguard Total Stock Market Index (VTI), international stocks through Vanguard Total International (VXUS), and a sizable position in Fidelity Blue Chip Growth.
Should VXUS go in the taxable account to take advantage of the foreign tax credit? Or does its lower tax efficiency mean it belongs in a pre-tax account instead? Should VTI be in the Roth since it might have higher expected growth?
And then there’s the Fidelity Blue Chip Growth fund. My wife and I don’t want to sell it, but I realize it’s probably the least tax-efficient of the bunch. So if we want to keep it, does it make the most sense to try to shift it into a tax-advantaged account?
In short, how should we think about placing these three specific funds across our different account types to make the most of tax efficiency—while still honoring our preferences and keeping things simple enough to stick with?
Anonymous asks (at 34:13 minutes):How do I apply the efficient frontier when my investment options are limited? I’m a government employee using the Thrift Savings Plan (TSP). I’ve been struggling to merge the idea of the efficient frontier with the limited funds available to me.
I’ve experimented with different mixes, but I haven’t found a way to reduce risk without also reducing returns significantly. We have just a handful of options: a fund that tracks the S&P 500 (C Fund), a small-cap fund (S Fund), and an international fund that excludes China (I Fund).
Right now, I’ve got 60 percent in the C Fund, 20 percent in the S Fund, and 20 percent in the I Fund. That seems like a solid mix to me, but I want to ask—how would you evaluate these options to get as close to the efficient frontier as possible, given the constraints?
Resources Mentioned:
Article 34 : Gold Hedge Againt Sequence Risk
Everything You’ve Ever Wanted To Know About Annuities
How Should You Invest 1 Million
Retirement Planning with Dr. Wade Pfau
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