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If you withdraw your money early from an annuity, you may pay substantial surrender charges to the insurance company, as well as tax penalties.
There are generally three types of annuities — fixed, indexed, and variable.
The company that bought your annuity will then take ownership and start receiving the payments that you would have had.
Quite often the companies that will allow you to SELL ANNUITIES will take about a 7% or 8% discount rate on your money.
These periodic payments may last for a definite period, such as 20 years, or an indefinite period, such as your lifetime or the lifetime of you and your spouse.
In an indexed annuity, the insurance company credits you with a return that is based on changes in an index, such as the S&P 500 Composite Stock Price Index.
This means that their calculations relating to the value of getting your money now versus over a period of time (ie, the interest you would be able to earn on that money that you have now), at about 7% or 8%.
This isn’t too unreasonable, but you definitely want to shop around if you plan on trying to sell an annuity or other structured setttlement.
There are often major fees involved if you ever want to take your money out of an annuity, so you’re almost stuck there.
As you can see, there is much to review and discuss in making this decision and a blanket answer would not be appropriate.
I, or another qualified financial advisor would be happy to help guide you through this important juncture in your life.
I was wondering if I should liquidate this annuity which would pay off my mortgage and use my house for rental income (est.... (fixed, variable, indexed) Is the annuity in a retirement account? There a many factors to be considered before making this decision. (IRA, ROTH) Cost basis of annuity if in non qualified account? Are there any contingent deferred sales charges still applicable?
There a many factors to be considered before making this decision. Discussing this in more depth with a qualified financial advisor is a good place to start. What is the cost to carry the home in addition to the mortgage?
An annuity is a contract between you and an insurance company that is designed to meet retirement and other long-range goals, under which you make a lump-sum payment or series of payments.