CardsFan
Thinks s/he gets paid by the post
No, I don't have any annuities, this is really for a friend. I actually know next to nothing about them, but through my reading here, I apparently still know more than my friend.
He and his wife are retired, they both have SS and pensions that provide more than their expenses. They also have some IRA's, and she has a 401k, and some investments from a recent inheritance. They have an FA that has worked with family, particularly the wife's mom, for years. They apparently have several (3-4?) annuities. The one in question now is reaching the 7 year point, and that, I guess is the trigger for making the next decision. This is not an inherited annuity. They bought it based on the FA's recommendation. This annuity is after tax, so taxes are due on the earnings. They do not need the income, and are looking at this money as a buffer for LTC. Value is around $100k, half being earnings.
My buddy is not dumb, but also not investment savvy. He asked for advise. His first thought was to cash it out, pay the taxes, and re-invest. This sounds like it could be the right move, but has tax consequences he has not really considered (could move him into a higher bracket).
That is about the extent of what I know. So my request to this esteemed group is:
What questions should he ask to get a better understanding of what he has?
And, what actions would be recommended, based on potential answers?
Thanks in advance for your thoughts.
He and his wife are retired, they both have SS and pensions that provide more than their expenses. They also have some IRA's, and she has a 401k, and some investments from a recent inheritance. They have an FA that has worked with family, particularly the wife's mom, for years. They apparently have several (3-4?) annuities. The one in question now is reaching the 7 year point, and that, I guess is the trigger for making the next decision. This is not an inherited annuity. They bought it based on the FA's recommendation. This annuity is after tax, so taxes are due on the earnings. They do not need the income, and are looking at this money as a buffer for LTC. Value is around $100k, half being earnings.
My buddy is not dumb, but also not investment savvy. He asked for advise. His first thought was to cash it out, pay the taxes, and re-invest. This sounds like it could be the right move, but has tax consequences he has not really considered (could move him into a higher bracket).
That is about the extent of what I know. So my request to this esteemed group is:
What questions should he ask to get a better understanding of what he has?
And, what actions would be recommended, based on potential answers?
Thanks in advance for your thoughts.