Financial advisors frequently turn to bonds when managing retirement investment risk, as they are traditionally viewed as a reliable hedge against stock market fluctuations. However, recent research suggests caution, with a Bloomberg report revealing that the bond market has experienced significant volatility in recent years, and the traditional hedging with fixed income might be inadequate. 

To circumvent losses from bond volatility, fixed index annuities (FIAs) can serve as an effective alternative. FIAs generally carry lower risks compared to bonds but they can do so at a reduced price with a much higher potential upside. Unlike bonds, FIAs can guarantee a lifetime income, providing a unique form of security for retirement planning.

Interest earned from FIAs is based on an external market index, such as the S&P 500, allowing investors to benefit from market gains without the risk of market volatility. This makes FIAs an appealing option for achieving a balanced and secure retirement portfolio.

Finsum: This really comes down to investor preferences, but stock-bond correlation is increasing which should give investors reasons to consider annuities.