"I have an annuity but I need cash now."

[Maximilian Hohmann]

Hello,

these are all interesting and very relevant questions, at least for those of us who have reached a certain age. I was faced with some decisions regarding pension/annuity a couple of years ago myself, when my life insurance ended. Not easy to decide if you want to take the money and invest it yourself or go for an annuity instead. All the fine TVM functions of all the fine (HP) calculators are totally useless in that respect, because the biggest unknown is your remainig lifespan which can range from 0 to 40 years at that point. So all you can do is calculate for those two extremes and try to place yourself somewhere in between.

In the end, the mathematics is the same as with a casino: The bank always wins because it has the big numbers/statistics working for them. My life insurer's offer was very straightforward and simple to analyse: The obviously calculated with the average life expectancy (78 years for a male in Germany) and an interest rate of 2% and offered monthly payments accordingly. I could do the same from my own bank account with the added advantage of having instant access to the entire capital should need arise. Selling back an annuity would just be the inverse, but always with some percentage deducted for the buyer.
One more problem, at least around here, is taxation. It is very complicated, changes frequently and adds one more unknown to the equations that is almost impossible to guess over the typical duration of annuity contracts. As in Dave's case in the initial posting some (large) employers offer you to pay part of your salary as a company pension or annuity at age 65 or 67. If you sell that early, some heavy taxation might result.

Regards
Max

NB: I did not take the annuity offer of my life insuer. Too much of a gamble for my taste. Instead I put some of the money into a care insurance, that will pay a monthly pension in case I ever need care, either at home or in a hospital. I hope to get very old in good health and therefore never need it, but just in case, it will help my wife and son to pay for the astronomical costs that need to be faced if a familiy member needs care.