My Annuity Adventure Part VI- Cashing vs Keeping

I still have not decided if cashing out is a good idea. How can I tell if what I am going to do with the money is more valuable than the payments themselves? One of the deciding factors is knowing what is the time value of money: This is the idea that a dollar now is worth more than a dollar in the future. Even after adjusting for inflation, a dollar “now” can earn interest until the time the dollar in the future would be received.

I was told having access to my money (capital) at any time, gives me more choices. What choices do I have available to me? Well, I can invest my money properly and create equal or better payments than my annuity. Okay, better sounds good to me. So what is the advantage of cashing out if I invest my money and only create the same amount of my current payments?

Honestly, as an American it is about exercising my right and privilege to do what ever I want with my money, when ever I want to, bottom line. I can spend days considering the value of cashing out vs. the value of keeping my annuity. I can calculate the time value of money and how to make my money worth more or at least keep it from losing value. It comes down to having MORE CHOICES, OPPORTUNITIES AND FREEDOM.

What is the actual value of having my money readily accessible to me? A REAL EMERGENCY will make discussions about value and sound decisions irrelevant. Having a current life threatening health or abuse situation or finding yourself suddenly homeless is the most valuable reason for cashing out. Selling to invest your lump sum for emergency access in the future gives you the freedom to access your capital quickly.

Just remember, cashing out and investing involves having a tolerance for risk as part of the decision making. For people with “0″ risk tolerance annuities are a good thing; they are low risk. For people with “0″ discipline, annuities are a good thing; there is no management involved. For people who cannot afford to live without their annuity payments, annuities are a good thing; the payments are dependable and consistently the same amount.

Everything in life has risks and value attached and measurement of each can be more an instinct or a need than an actual specific value. Take some time to weigh practical choices with your personal needs. Get some professional advice and then trust your ability to know what is best for you.

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