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Retirement Planning/annuity after surrender period ends


The fixed annuity I have with Principal Financial Group is about to go out of the surrender period after 5 years and it's been earning 4.2%. I'm assuming that rate would be much lower now if I left it in and I'm not going to annuitize now at age 62.
Whenever I've had an annuity in the past and the surrender period ended, I was told by an advisor they can get me a better rate somewhere else, which they did, and I end up taking my money out and putting it with a different company's annuity and entering into a new surrender period. It's either that or leave it with Principal at a lower rate, but out of the surrender period. Considering I wouldn't need to touch this money and want to keep an annuity in my portfolio, I guess it makes more sense to switch again and get a higher rate, but not sure. Thanks

Dear Lee,

You are correct in everything you have surmised. However, current interest rates on the accumulation value throughout the industry are less than 3%. It may be that you are better off to remain where you are. But not necessarily.

There is a new rider offered in some form by several companies. This is a lifetime income rider that uses as its base an Income Account Value. Depending on the company, the IAV has a guaranteed compounded rate of growth significantly greater than the actual Surrender Value.

I use this concept in conjunction with other products to retain the kind of return (as much as possible) we have been accustomed to.

Please let me know if you want me to pursue this with you.

Willard R. Brumbaugh, LUTCF
(888) 792-2379

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Willard R. Brumbaugh, LUTCF


I have answered many questions regarding 401ks, IRAs and annuities as well as life insurance. I have been counselling against most Qualified Plans since 1994.


Ranked in the top 5 in retirement catagories at most of its last 2 1/2 years. Organizations I belong to: National Association of Insurance and Financial Advisors-California
Inland Empire Estate Planning Council

Life Underwriters Training Council Fellow

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