Investment annuities offer a means of saving for retirement, allowing you to defer tax payments on the funds you add to the account and guaranteeing a steady income over a long period of time. As long-term financial products, annuities are often purchased with specific financial goals in mind.
Annuities have some drawbacks, however. You can only access funds once the annuity matures. Draw money out of the annuity before that point and you may pay costly penalties. Also, commissions and annual fees could deplete the annuity balance by as much as three percent each and every year.
Reasons to Sell Annuity Payment Portions
When financial circumstances change, you may need access to the capital locked away in your annuity. The reasons to trade cash for annuity payments vary but common motivations include:
- Buying or renovating a home
- Funding a business startup
- Investment opportunities
- Paying college tuition
- Paying off debt
If you inherited an investment annuity, you may simply prefer the freedom of a lump sum rather than long-term structured payments, which may not meet your financial needs.