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When to take annuity payments

The IRS mandates that annuitants begin receiving a minimum annual withdrawal amount for qualified annuities on the date they turn 70 ½, or 72 if you turn 70 after July 1, 2019. However, there are reasons to sell your annuity sooner than required, such as: Making a major life purchase.

When should I start taking money out of my annuity?

To avoid owing penalties to the IRS, wait to withdraw until you are 59 ½ and set up a systematic withdrawal schedule. What is the free annuity withdrawal provision? Many, but not all, insurance companies allow you to withdraw up to 10% of your funds prior to the end of the surrender period.

When should annuities be taken?

Other than that, they operate like immediate annuities. Generally, an efficient approach is to purchase it at age 65 and start taking income around age 85 (the longer time horizon increases the income potential). That said, you should take your life expectancy into account before implementing this or any strategy.

When should I take annuity or lump sum?

How long you actually live is one of the more significant risks faced by retirees. The longer you live beyond your actuarial life expectancy, the better the annuity option generally becomes because of the guaranteed lifetime payment. If you are in poor health, you may find the lump sum more attractive.

Can you withdraw from an annuity before 59 1 2?

If you withdraw money from an annuity before you are 59 1/2 years old, you will generally have to pay a 10% early withdrawal penalty. In addition, you may also have to pay surrender charges if you withdraw money from a deferred annuity before maturity.