Dear Dr. Don,
I have several retirement vehicles currently in place, all of which have lost money. I am contemplating rolling them all into an annuity which guarantees a greater return over time. Is it best to wait until my retirement accounts have regained what they lost? Or would it be best to roll them into the annuity now?
— Jennifer Juncture

Dear Jennifer,
You’ve got company in singing the retirement account blues. In 2008, the average 401(k) account balance lost 24 percent, according to an Oct. 7 article in The Wall Street Journal. That compares to a 37 percent decline in the S&P 500 index in 2008. The S&P 500 index has rallied off its March low for a year-to-date return of about 19 percent.

Waiting for your retirement accounts to get back to even is a behavioral finance trait called anchoring. You’re trying to avoid the regret of taking a loss. But you should make a decision whether to continue staying in an investment based on the outlook you have for the investment, not what you originally paid for it.

Annuities can be a valid choice for retirement income. However, there are many variations in the type of annuity offered and the options you can add on to the annuity. So, I can’t make a blanket recommendation for you to roll your retirement monies into an annuity.

You should get the advice of a financial planner — ideally a fee-only planner — who can help sort through choices that depend on many variables, such as the decision between a fixed annuity that pays a set return and a variable annuity with its returns driven by investment performance. The Bankrate feature “Financial planners: Not just for millionaires anymore” can help you decide on a financial planner.

From your letter, it sounds like you want the certainty of a fixed annuity. However, with interest rates at historic lows, I’d hesitate in recommending a fixed annuity at this time.

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