Surrender or Annuitize annuity?
I have an annuity that has returned approx 3% annually since 2004. It returned 3% in 2014, -.55% in 2015 and -1.18% so far in 2016.
I'm not happy with the return, and I'm in the process of consolidating/streamlining our investments into 2 or 3 sources, so I feel the need to do something with the annuity. We are 60 /61 years old and anticipate living off cash and post tax investments for the next 5-6 years. Then start taking IRA withdrawals and paying the tax from SS income.
I see a few options:
1. I could surrender it now and take the cash, paying tax on $66k gain. Then put the proceeds in my post tax account. But I'm unsure of the affect of this on my 2016 taxes, given that I have some gains I need to account for in 2016.
1a. I could surrender it in 2017 when the tax situation will be much clearer - no anticipated unusual income/cap gains in 2017.
2. I could annuitize the annuity, taking lifetime (or short term?) payments.
3. I could leave it as is.
I'm leaning toward 1a. The surrendered $ would be invested for at least 5-6 years in a post tax account that has a return that should double that of the annuity.
Is there anything else that I'm missing?
"And in the end, it's not the years in your life that count. It's the life in your years" - Abraham Lincoln