Donna Wants to Know “Should I Take My Money Out?”

“Dear Steve,

I have my home paid for and owe nothing on my car, I have a rental that I owe $25000 and I have it rented for $475.00 month. My payment is $303 month and my insurance is $33.00 month and my taxes are $100 month. I want to sell my rental but with the economy I will have to wait.

I have an annuity worth right now of $29000. I have 20,000 in savings and cds. I am 73 years old and I am a real estate broker associate and the market as you know is bad. My ss is $1000 a month. .

Should I take my money out of the annuity and pay off my rental and have added income. I would like to sell my rental but their credit is not good enough yet. Maybe in 2 years when the market is better, hopefully, I can sell this home. It is worth $75,000


Dear Donna,

When I saw your question I immediately knew who I needed to ask for a better answer than I could give you and that is my friend Paul Bennett who is a Certified Financial Planner.

Mr. Bennett is a Certified Financial Planner™ professional (CFP®), Chartered Financial Consultant (ChFC), Accredited Investment Fiduciary™ (AIF®) and Managing Partner of c5 Wealth Management, LLC. Mr. Bennett has over twenty years of financial planning experience. He specializes in providing objective, unbiased and creative solutions for families and businesses regarding their investment management and financial planning needs. To learn more about Mr. Bennett and c5 Wealth Management, please visit www.c5wm.com.

Here is what Paul said when I forwarded him your question.

Donna – I have to answer your question with a question first – do you need additional monthly income to make ends meet?

If not, I would recommend that you consider not liquidating your annuity to pay off your mortgage for 4 reasons:

  1. there may be early withdrawal or surrender penalties;
  2. you will owe income taxes on any gains that are in the annuity;
  3. you currently have rental income that covers your primary expenses associated with the rental property (mortgage payment, taxes and insurance);
  4. you have a better opportunity long term for your annuity (if it is a variable annuity) to outpace what it is costing you for your mortgage.

If you do need additional monthly income to make ends meet, then you could utilize the annuity to provide you with some income either in the form of annuitizing (turning all or a part of the annuity into a guaranteed stream of lifetime income) or on a monthly basis take out interest from the annuity.

Finally, I agree with your assessment of the current real estate environment; it is not a time to sell – buyers are on the prowl looking for deep discounts. Wait it out. – Paul

It certainly looks like Paul had some valuable advice to offer and good feedback. It does make sense to wait it out if you can make it month-to-month right now without cashing out the annuity. I just knew Paul was the “go to” guy for your question.


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