No one can expect to live out of their retirement fund for the whole life after the retirement. You would obviously need some kind of stable and/or monthly income to support your retirement fund. The most common retirement income source is the stock market.
Using the passive bond allocation, the retirees can withdraw money and also make an yield out of the investment, whenever possible with low volatility. However, creating such a portfolio needs a lot of experience and advice from investment gurus. At the young age, the funds should be held in the stocks which are aimed towards growth. As you approach retirement, the funds should be locked in bonds and dividend based stocks.
If you want to use the stock market as a retirement income, it is better to start, as soon as possible. At the age of 66, you cannot enter the stock market for the very first time and invest in the right vehicle. Using small investments in reliable growing stocks would increase the nest slowly and by the time of retirement, you would have a considerably big amount to use for your retirement and also the experience to invest your other retirement funds.
With the immediate annuity, your fund would be invested in such a way that you would be gaining a constant amount, every month for the rest of your life. The disadvantage is that the money you invest is not an emergency liquid fund. Which means, you cannot withdraw and use it for other purposes. Once invested, the money is out of your reach. This immediate annuity would help you to gain more hold to the fund after your retirement.
When it comes to immediate annuity, it is better to buy at different stages of the life. This would help you to get the money at equal intervals, without gaining all, at once. Buy only from the companies which have a high financial rating. There are a lot of other companies which might be a spam. It is not safe to put all your investment funds into it. Keep a part of your fund for emergency cash, investment in stock market and other investment vehicle and invest the rest in immediate annuity.
It is also better to have some of the money in stable vehicles like land, to make sure that the market fluctuation would not eat up all your income. Falling into the wrong hands for investment is also a big mistake.