re: Helping my dad decide between lump sum or annuity

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Cash out and buy 1 or 2 rentals with enough case to take the hit in taxes...
--does he need it immediately with income.
There are ways with little risk outside of Wall Street to grow it 10-15% per year and then receive income after that...

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This is a terrible idea.

You are talking about a man on the verge or retiring with NO savings and you want him to take on the liability of 1 or 2 rentals? Assuming he even had the credit to do that, it would be far too risky. He's a few months of no tenant away from going into debt.

Tough to really say. Need a lot more info to make a accurate opinion

TigerDeBaiter I think you hit the nail on the head. Even a safe municipal bond would get $14,000 over 5 years. This obviously isn't money that he should be taking risk with. What low risk options are out there that have ROI +3%?


Just to recap and clarify: (some are asking for more info)

current age 59. Good health. Will work several more years. $100,000/year income

60. $587/month or $105,000 lump sum
65. $839/month or $119,000 lump sum

Owes $110,000 on $170,000 home (value might be higher)

Has emergency fund but no other savings or retirement account

Does have land inherited. He says $20,000 value. Looking into selling.

Just bought new truck. No clue on amount owed.

That's everything

There's no easy way to say it, but your dad is never retiring unless he takes some drastic steps. The annuity isn't worth worrying about unless he takes drastic life changes.

With the annuity and social security he has maybe a $25,000/ year income. He can't afford a truck payment and house payment on that.

With that income he could retire in his late 60s if he wants but it's going to take a life changes.

He clearly lives beyond his means and likely has a ton of toys and hobbies he can't afford.

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There is no right or wrong answer

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To this question yes, but the bigger issue really seems to be "does dad want to retire or does dad want to spend the money"

It's his life to lead but it seems like dads a spender and at this point that's the wrong choice to make. He's got to slow his roll it seems like given his salary and lack of savings. At 30 and a lower salary I have more equity in the house, emergency fund, and fully finding retirement. That's the much more relevant financial discussion before deciding what to do with this particular asset.