AboutJohn D Smith, CFP Expertise I can answer detailed questions regarding mutual fund investing, retirement planning, education planning and related financial planning/investment issues. I have a B.S. degree in Financial Planning & Counseling. I am also a Certified Financial Planner (CFP) and have performed fee only investment management and financial planning services for the past 11 years.
Question My parents have most of their life savings in annuities. Half of that amount is with a company under AIG. The other is with Sun Life America. They are fixed annuities. I feel they should consider cashing these out, as although they are guaranteed by State, if there are many failures it could be time consuming and difficult to retrieve their funds. They are concerned about the taxes due if they cash in the annuities. They are 87 years old. I feel they should consider cashing in some of the annuities, even if they would have to pay some tax. What is your opinion?
Thank you, Rita
Answer Hi Rita. Unfortunately, in today's day of uncertainty, this is a difficult question to answer since the correct answer is based somewhat on speculation. In addition, it is difficult to determine whether or not annuities are appropriate for your mother and father without know much more detail about their specific financial situation. At their age, it would appear their withdrawals needs will be diminishing, so to put your mind at ease about the safety of the annuities, you should check the underlying Moody's and S&P rating of the insurance company that underwrites the product. If they are still receving good ratings (which I believe they will) then atleast you know that the accounts aren't in any immediate danger. I hope this helps. Sorry I couldn't offer more specific guidance.
