Is the $265k coming from a tax deferred account? If so, I would definitely not buy the annuity. If the $265k is coming from a taxable account, you will pay income tax on the portion of the monthly income that is considered earnings. You need to ask how that will be calculated. If you don't need the income to live on, I would not buy the annuity. Currently, you can get 5 percent on a CD or even a money market account, which is $1,104 per month, and you can dip into the principal as needed to make up the difference. To me, that seems like a better way to go because you will be able to preserve part of your principal. Some things to consider. Also, ask your advisor for a "complete" copy of the annuity contract (not a brochure or a sample). Typically, they will refuse to provide it, which is why I hate annuities. I would never agree to a contract that I cannot read in advance. Good luck.
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