Annuities vs. other retirement options
I have a retirement fund that my work gave me. It can either be an annuity or cash payout. Which is the better choice? I’ve heard that annuities are a bad choice. I just want to do the right thing, it’s vey scary being retired and not having a paycheck coming in each week. So I’d want the best for me and my family.
Terry Says
PK, so here’s the choice you have. Either you get a fixed monthly check that lasts your life (or a smaller monthly check that will last your lifetime AND that of your spouse). Or you have the risk of investing the money wisely.
The problem with that fixed check is that if inflation returns, the amount of your monthly check may not cover the rising cost of your expenses. If you’re also getting Social Security, that check will get an inflation adjustment.
Now, there is an in between “play” but it’s sophisticated and you have to handle it correctly.
Ask if the lump sum of money option can be rolled over into an IRA. That’s important because you don’t want to pay taxes on all of it right now!
If the answer is yes, you could roll HALF into an IRA at Fidelity. And you could contact my annuity expert “Stan the Annuity Man” and ask how much money you could receive monthly in an IMMEDIATE ANNUITY that lasts your lifetime and that of your spouse with the other half of the money.
Do this research before making a decision. Even if you want to put it ALL into an annuity, he may get you a better monthly payout — based on your age and state of residence. So it is good to compare.
