The Oblivious Investor blog has a good post about how to get out of a bad annuity. If you own any annuity, it is worth a look.
Not all annuities are bad - just 95% or more. For this reason, I typically tell folks to completely avoid all annuities. The odds are the annuity your salesman is pushing is one of the bad ones. He/she would not be pushing it if it didn't provide big fees for him/her. While it might not make tax sense to sell out of an annuity, it might make sense to "exchange" a bad annuity for a less bad annuity. I would hazard a guess that if you have an annuity, and it is NOT a Vanguard annuity, you should look into exchanging into a low cost Vanguard annuity.
Most annuities will charge a "surrender fee" when you leave, but this fee gets smaller over time and quite often goes to zero after 7 years. You've got to do the exchange right to avoid a tax headache - so read the blog at the link above, and call Vanguard at 1-800-357-4720 if you are not comfortable doing this yourself online.
As I always say, I don't work for Vanguard, but they are the lowest cost investment manager in the world and most of my money is invested in their mutual funds and ETFs. That is why I always recommend them to family and friends and use their funds and their ETFs in my investment recipes in my books.
Marvelous work pals, I love reading your articles.
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