Meet Sarah, a lively young grandmother who's spent her life saving and planning for retirement. Now, the day has finally arrived—she's ready to retire. But like so many others, she's unsure if her nest egg is enough to support her golden years.
So she attended a Retirement Readiness Workshop where she learned about different income planning strategies. It led her to wonder about what to do with a variable annuity she's been holding on to for quite some time, currently valued at $650,000. It had been providing her with a steady income of $2,700 per month, and she was past the penalty period, meaning she could now make some changes.
Enter one of our expert financial advisors. After sitting down with Sarah and analyzing her situation, they discovered something exciting. They found a way to help Sarah continue receiving that $2,700 monthly income—but here's the twist: they only needed to use 63% of her original annuity value, or around $450,000, to do it!
Now, with $200,000 left from her annuity, Sarah had options. Would she use it to diversify her portfolio, helping to ensure she could maintain her retirement lifestyle for years to come? Or, maybe, she'd finally tackle a long-held dream—taking her grandchildren on a once-in-a-lifetime trip to create memories they'd cherish forever.
Sarah felt excited! For the first time, the thought of retirement didn't just seem possible; it felt exciting! With her advisor's help, she realized she had the flexibility to make her dreams come true—both financially and personally.
If you're holding onto an older annuity like Sarah was, it might be worth taking a fresh look at your options.
By David Edge
David Edge is a retirement lifestyle writer and contributor to the ARA monthly newsletter. His articles blend personal stories with practical insights on living well in retirement.
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Easy Eddie's Take
Sarah's story is something I hear all the time. A lot of people ask me, "Should I keep my old variable annuity or look at newer options?" Here's the thing: annuity products have changed quite a bit over the years, and sometimes what made sense ten years ago might not be the best fit today. Variable annuities often come with higher fees than fixed indexed annuities or immediate annuities, which is probably how Sarah's advisor freed up that extra $200,000 while keeping the same monthly income.
Most people are surprised when they learn this, but you're not locked into keeping an annuity forever, especially once you're past the surrender charge period. In 2026, with interest rates still higher than they were a few years back, there are often better income options available. Think of it this way: if you can get the same monthly payment for less money, that frees up cash for other parts of your retirement plan, whether that's diversifying into a traditional IRA, building an emergency fund, or yes, taking those grandkids on vacation.
The key is having someone run the numbers on your specific situation. Once you see how it works, it's actually pretty simple.