HappyOutsourced
Recycles dryer sheets
- Joined
- Oct 29, 2013
- Messages
- 67
I'd like to ask a question about variable annuities but I'm relatively new to the forum and don't know to how to start a thread. I'd appreciate any help.
My husband and I both 'invested' in variable annuities over 8 years ago. Fortunately, they are small - 23,000 for me and 24,000 for him. Most of the money is invested in a restricted set of mutual funds.
The annuity guarantees '6%' on the account balance - which is the abstract balance that can be annuitized after 10 years. (It's actually more like 5 1/2% since some of the money has to be kept in cash - found this out later.) There's also a death benefit equal to the account balance. If the cash value (surrender value) gets really low, the account is closed so you are forced to annuitize before it gets to zero.
The contract allows us to take out the 6% rollup every year instead of adding it to the account balance. About 3 1/2 years ago we decided to go start doing just that. So we receive a small check every month.
If you add the total amount of the checks we've received to the surrender value, it looks like we've made about 13% over 8 years time (not PER year but during 8 years.) So we're a little ahead right now.
We're past the surrender fee time and trying to decide what to do. Options:
1) Cash annuities out - it's ROTH money so no taxes (I know, I know...).
2) Continue to draw a small check each month as long as possible (no COLA ,though). If the cash value gets too low we'd annuitize the account balance. If the cash value held, the beneficiary would receive the death benefit.
3) Stop drawing the check, allow the account balance to accumulate and draw a larger check each month in 10 or 15 years. We're both about 60 years old. As in number 2, we'd have the possibility of annuitizing or having the death benefit.
Another thing, the insurance company is now forcing us to put the money in conservative investments - hmph! The guy who sold it to us thinks we ought
to just keep drawing the check every money forever. I think he's already received the bulk of his commission up front so he might be sincere.
I like option 1 but I've heard the insurance company would love to get out of the contract, so I don't know.
What do you think? Thanks a million for your advice.
My husband and I both 'invested' in variable annuities over 8 years ago. Fortunately, they are small - 23,000 for me and 24,000 for him. Most of the money is invested in a restricted set of mutual funds.
The annuity guarantees '6%' on the account balance - which is the abstract balance that can be annuitized after 10 years. (It's actually more like 5 1/2% since some of the money has to be kept in cash - found this out later.) There's also a death benefit equal to the account balance. If the cash value (surrender value) gets really low, the account is closed so you are forced to annuitize before it gets to zero.
The contract allows us to take out the 6% rollup every year instead of adding it to the account balance. About 3 1/2 years ago we decided to go start doing just that. So we receive a small check every month.
If you add the total amount of the checks we've received to the surrender value, it looks like we've made about 13% over 8 years time (not PER year but during 8 years.) So we're a little ahead right now.
We're past the surrender fee time and trying to decide what to do. Options:
1) Cash annuities out - it's ROTH money so no taxes (I know, I know...).
2) Continue to draw a small check each month as long as possible (no COLA ,though). If the cash value gets too low we'd annuitize the account balance. If the cash value held, the beneficiary would receive the death benefit.
3) Stop drawing the check, allow the account balance to accumulate and draw a larger check each month in 10 or 15 years. We're both about 60 years old. As in number 2, we'd have the possibility of annuitizing or having the death benefit.
Another thing, the insurance company is now forcing us to put the money in conservative investments - hmph! The guy who sold it to us thinks we ought
to just keep drawing the check every money forever. I think he's already received the bulk of his commission up front so he might be sincere.
I like option 1 but I've heard the insurance company would love to get out of the contract, so I don't know.
What do you think? Thanks a million for your advice.