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Retirement Planning/annuity after surrender period


The fixed annuity I have with Principal Financial Group is about to go out of the surrender period of 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

the financial qb
the financial qb  
Lee thanks for your question and I hope I can give you some insight and help in your decision making.

First, I am not sure what type of annuity you have whether it is a true fixed annuity or some kind of Equity Indexed Annuity. So I cannot comment on whether that interest rate credited was good or how it was figured. In any regards, what should be of greater concern to you is for you to understand what is the purpose of this annuity in your portfolio and does it still or will it serve the purpose of what you are trying to accomplish.There are obviously some positive effects of having a annuity with no surrender charges but again it all goes back to whether the annuity meets your intended needs.

I would seek out the help and guidance of a Certified Financial Planner, preferably one who works on a Fee who can give you some guidance in this matter and provide a plan and process for you to be able to accomplish your objectives. Of course at your stage in life make sure the financial advisor is well versed and understands the ins and outs of retirement income and distribution planning. Many in the industry DO NOT understand this planning process. Take some time to thoroughly interview your advisor.  

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Richard E. Reyes, CFP


I can provide answers to questions relating to retirement especially relating to; income distribution, tax efficiency, long-term care insurance, life insurance, estate planning, asset protection, variable and fixed annuities, alternative investments and prudent portfolio design.


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