• Question
  • Income streams

    Asked by a 62 year old man from Houston, TX on 4/21/2016

    I bought a deferred annuity 10 yrs ago with the intention of annuitizing upon retirement. But now that I've recently retired, I'm second guessing the decision. In the 10 years since I bought the annuity, my net worth has grown 3 1/2 times. I have some other income streams to help me meet my annual income goal. So, I'm struggling with whether or not to annuitize, or simply put the money to work elsewhere?

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  • Categories: How to Choose, Annuities

Answers

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  • This is a viable question, and it comes down to a few items. Control - do you want to keep it? Longevity - how long do you and your spouse (if applicable) anticipate needing income? Inflation - have you adjusted for it? Other sources - social security, investment/IRA income? Liquidity- is it real or perceived? This is the type of retirement income question we address for our clients all the time.

    I am happy to explore these questions in more detail.

    My office is located in The Woodlands
    www.studemontgroup.com

    19221 N I-45
    Suite 320
    Shenandoah, TX 77385

  • Login to rate this answer:   Answered on 4/21/2016
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  • John,

    With annuities, there are multiple variables that will affect your decision on when and how to take your funds. Annuities are often sold with riders that offer additional benefits besides that of tax-deferred growth. Does the surrender value differ from your benefit base? If it does, you could be missing out on the annuity benefits you have been paying for in the last decade if you simply withdraw the funds. Also, what is the gain in the account? If it’s a non-qualified account the taxes that you’d pay on the gains may not be worth taking the income if you have other sources from which you can draw. If the policy has a Death Benefit, the contract could be worth much more to your heirs than its current face value.

    Because of all the moving parts associated with an annuity policy, it’s best to go over the details and scenarios on a call. Please feel free to reach out to my office to discuss how you can optimize the current value of your contract.

    Regards,
    Peter Karp
    Karp Capital Management
    Telephone: 415 345 8185

  • Login to rate this answer:   Answered on 8/10/2016
**All above answers are provided as general information only. No warranty is made regarding the fitness or accuracy of the information provided in this answer. You should seek advice from a licensed CPA, attorney or CERTIFIED FINANCIAL PLANNER™ as to your unique financial situation.