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Annuities

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 Is there a smart train of thought of when to start drawing annuities? Our scenario roughly. We currently have enough monthly income that we don't really need any more. We have a well versified portfolio in the stock market and CD's and don't draw anything from them and we have a small annuity that has a 5% guaranteed growth each year, small being $114,000 current value with a $155,000 high water mark that the monthly payment would be based on if we chose to start drawing.

 Our thought is that if we started drawing the $662 allowed payment from it now that we would need to draw a payment each month for over 14 years before we would break even with the cash value. I'm thinking at our current age it might be a good time to start taking money unless we want the policy holder to come out smelling like a rose instead of us LOL!!! And no, we have no kids to worry about leaving anything to.

 I don't know, leave it sit and don't worry about it or add a little money to our eating out and entertainment budget each month LOL!!        

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While I'm not a fan of annuities, that wasn't the question so enough of that. It looks to me like your best plan might be to start drawing it out now, but then put the funds into some other type of investments where the income from them is reinvested. An important factor to consider is your ages and life expectancies. If I read your post correctly, when you start to withdraw, any funds remaining at your death belong to the annuity company? If so I would start to draw down ASAP. What happens to the funds if you draw out nothing at all? 

One thing to consider in any planning of this sort is what was your intended purpose for the funds when you set them aside? If you wait too long to begin spending that money, you may find that either your health has deteriorated to where you can't travel or otherwise enjoy the funds, or one of you might pass and leave the other alone without the other to share the results with. Not long ago we began to "spend down" on our invested funds because we are both now in our late 70's and have come to realize that we have limited time in which to share the results of our savings. 

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To answer you question Kirk, I don't think there was a real plan when the annuity was started other than additional income and the financial advisor we had had done such a good job for us that when he suggested it we sort of got on board all those years back. Back when the annuity was started we were still working and really didn't have an idea of what we would be bringing in when retirement came around.   

 As far as what happens to the money of one person passes, the other gets the current cash amount which at this point is $114K but who knows what it would be at that point, more or even possibly less.

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