Free Up Assets with Annuity Audit

Randy Kitzmiller   |   August 2023   |   1-minute read

The Story

In 2013, Maria used IRA money to purchase a variable annuity averaging a 4.63% net return. The annuity has a current value of $162,043 and an income value of $186,145. She is interested in achieving a higher income payout.

The Problem

The current variable annuity offers two income options:

  1. Income for life of $9,307.25 per year
  2. Take 7% of the income for 14.2 years, achieving an income of $13,030.15 per year

If Maria takes the second option, she earns a greater income, but she’s worried about outliving the payout.

Client Profile

Maria is a 70-year-old female. She is retired, relying on her IRA, Social Security and other investments for income.

How Annuity Audit Works

Maria’s advisor worked with Ash’s Annuity Audit team to determine if there are other solutions available for the client. The advisor provided basic policy information and the team used it to develop a comprehensive review of the existing annuity, explaining what the client owns and how it works.

In this case, because it’s a variable annuity, the audit report discussed additional options, explaining the best uses for each, and allowing the client and advisor to determine which is the best fit for current goals—including the option of holding on to the existing variable annuity.

The Result

Based on the Annuity Audit, the advisor was able to present four options:

  • Keep her current variable annuity
  • Move to a fixed index annuity (FIA)
  • Consider a MYGA (multi-year guaranteed annuity)
  • Move to a RILA

The advisor was able to explain the pros and cons to Maria, focusing on her risk tolerance. Maria decided to roll the current variable annuity to a fixed index annuity to able to provide greater income in her retirement.

The new annuity also offered two different annuity payout options:

  1. Income for life of $12,558.33 (almost as much as the 14.2-year option on her current annuity)
  2. Keep income for life at $9,307.25 while freeing up $41,949.43 of AUM

The FIA allowed her free up 25% of the annuity's value for a greater income payout or for alternate investments. She chose the second option, which offered her the same income while freeing up assets for other goals.

Read more about the Ash Annuity Audit here.

About the Author

Randy Kitzmiller’s strength is his ability to simplify complex problems and solutions. With more than 25 years of experience, he works with advisors in Minnesota, Wisconsin and Iowa to help their clients find protection and security in their retirement planning.