we are not even talking about the same thing. you are talking about variable annuities and i am talking about fixed annuities that claim to guarantee income.
Inflation scares me enough that I would not want to get involved in bonds or annuities. Here is some free advice (probably worth that--ignore if you don't like): go to S&P or Mergent's and find some long-term dividend achievers. Don't choose the ones with the highest dividends. Instead, pick the big, boring, recession-proof types of companies. Look through their dividend histories, and you will have no problem finding 20 or more of them whose dividends and returns have beaten inflation rates by more than 6%. Then, buy them, but don't buy and hold them. Use a methodology to time the market a bit (see below) and get out of the stocks when the market goes south. If you want to make a little more return, sell some covered calls on some of the stocks (but not all of them--leave some with room to run). But--same thing, don't buy and hold them. When it's time to take cover, buy the calls in and sell the stocks. They'll still be there later when the sun comes out again. Another rule I have: anybody who cuts their dividend, or who has been raising their dividend and fails to do so, gets sold immediately. As for market timing and asset allocation, there are some ideas in The Ivy Portfolio by Mebane Faber. There are also some web sites that can help you, for example http://www.mtrig.com/ which you can join for free. I also use vectorvest.com, but you have to pay for that one. I'm not associated with any of these sites or services. I do hate making financial advisers and insurance companies rich.
....and before anyone comes on here and flames me about naked puts, you can't use them in a retirement plan.
WAVE and I suggested variable annuities to the OP on page one. SCATAPHAGOS and I debated them on page 4 and 5 before you chimed in with your comment that annuities are a scam and then your subsequent replies about deceptive advertising, rider fees and lost control of money. I hate to break this to you but evryone here has been discussing "variable" annuities. Well, except you, without mentioning the words "fixed annuity" until now.
Good post with lots info for OP and others. Regarding your fear of annuities, if you have the good sense to get out of the way of being invested in stocks when it's time to take cover, you can do the same with the annuity by going into cash. AFAIK, the only drawback is that you don't amass the guaranteed growth for "income purposes while in cash (for example, a 6% contract). That's really a small price to pay for dodging a bear market.
In a "fixed annuity", the insurance company is going to guarantee you "ONLY what they can get in a guaranteed return... minus their vig", of course. What kind of GUARANTEED return can you get today, and where? Insurance companies are going to "guarantee" you something less than that (and likely SIGNIFICANTLY less)... with the difference going to them.
How do you like VectorVest? Edit: Forgot to say, the OP might also want to check into GNMAs. I ALMOST bought a GNMA fund in 2008 when IIRC the yield was around 5% (I think it was Vanguard). I haven't checked the yield lately. GNMAs are explicitly backed by the government so they should be as safe as USTs, unlike Fannie and Freddie which the treasury has committed to backing for 3 years.
I like it because they know how to pick stocks. I suck at stock picking. You can use the numerous methods on their site to adjust the list of stocks you get to the level of risk you are interested in. They rank every stock, even the garbage. A guy in my Vector Vest group gave a presentation showing how he is making 10% a week for the aggressive part of his portfolio by using VectorVest strategies to trade penny stocks. That is too Las Vegas for me, but that's fine--there are all kinds of traders.