Annuity Or Payout?
Mother has spousal payout option (she never married). She is 65, payout is around $15,800 or $123 a month in an annuity. We need help deciding what to do 🙁 Thank you!!!
Terry Says
First thing, is it possible to do a tax-free rollover to this payout — or are these the only two choices? Because if she gets a payout, you must take taxes into consideration. It’s not that much money — but could it impact other government benefits by moving her into a higher income level if taken all at one time??
The second question is whether this is a “fair” monthly amount for the lump sum as an alternative. go to www.ImmediateAnnuities.com and put her age, gender, state of residence and that lump sum amount into the calculator. You’ll see what other insurance companies would offer as a monthly payment for that lump sum. That will let you know if the $123/month (lifetime?) is a good “deal”.
Finally, remember that the spending power of that monthly check will decline over the years because of inflation. Not much you can do about that because just putting the money in the bank with these low interest rates won’t keep up with inflation either! And other investments (the stock market) that historically beat inflation over the long run do come with short-term investment risk. I suspect she doesn’t want to open a fund statement and learn that she has lost some of the money!
