Keep Money On Hand For Emergencies The money used to purchase this annuity will be permanently locked into a contract, and your access to funds will be limited to the monthly income payments you will receive for life. You should use no more than 50% of your retirement assets, excluding your home, to purchase this annuity and keep at least $20,000 on hand for emergencies.
Don’t Borrow Money to Purchase an Annuity The benefits of this annuity may not exceed the interest you would be charged on a loan. Therefore, you should not borrow money to purchase this annuity.
Before You Move Assets, Consider Potential Disadvantages Review your current investments to see if they offer advantages not available with this annuity. Additionally, consider any surrender charges, penalties or fees you may incur on the money you withdraw from another account to purchase this annuity.
Consider Medicaid Eligibility Before Making a Purchase Consider Medicaid eligibility, since an annuity may be considered a countable asset if you apply for Medicaid assistance for a nursing home or other long-term care services. You should consult an attorney to understand how Medicaid may treat an annuity for the purpose of Medicaid eligibility.
Remember That Annuity Income Is Subject to Federal and State Taxation Like all forms of income, annuity income payments are subject to federal and (if applicable) state taxes. If you require specific information regarding your individual situation, please speak with your tax advisor.
| You can use money from a wide range of sources to pay for an annuity, including: |
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| Money in checking and savings accounts |
Existing annuity or life insurance policy |
| Maturing certificate of deposit |
Retirement plans such as an IRA or 401(k) |
This article is provided by New York Life for informational purposes only. Neither New York Life, AARP nor its affiliates provide tax, legal, financial or accounting advice. Please consult your own professional for advice specific to your circumstances.
The annuities offered through the AARP Lifetime Income Program are exclusively for AARP members from New York Life Insurance and Annuity Corporation. We’d be glad to send you a free Information Kit, including a personalized Lifetime Income quote based on the information you provide.
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