The economic downturn has shaken the confidence of many investors, and scores of people are looking for a way to cash out of investments to save what little they have left. Although financial experts recommend holding out, that’s simply not an option for some of us who need cash immediately. While some funds are not easily liquefied, annuities can be a source of instant funds. Here are some tips on how to cash out of an annuity right now.

1. Locate a company that specializes in annuity settlements. You will want to find the fairest and most professional service to handle your cashout, as these matters can be easily manipulated in favor of the broker. Exorbitant fees should be an indicator of a scam, so shop around!
2. Get references. Even if it’s just a search on Google to hear what customers have said about this company, you want to verify that you are doing business with a reputable firm.
3. Don’t rush. Research your options and take into account all fees and related charges. You’ll want to weigh your options carefully. You should double-check fees, the lump sum amount you will receive and what applicable surrender charges exist before making a decision.
4. Make sure you really need the money. If you’ve invested $100,000 and leave with only $25,000 – you might want to find another source of funds for your needs.
5. If you’re ready to go through with cashing out, your broker will negotiate a settlement with your insurance or retirement policy company to get you a lump sum. You will be asked to fill out paperwork, including banking information for the transfer of funds. This process can take anywhere from a few days to a several months depending on the complexity of your situation, so you should be prepared to wait.

Other Things to Consider
If your variable annuity has any withdrawal or income guarantees, you might consider these options before you completely cash out. For instance, an annuity with a guaranteed minimum income benefit may allow you to withdraw as much as 6% of your initial investment each year, no matter how poorly your investments perform. This means that if you invest $100,000 in the annuity, you could take out as much as $6,000 a year without sacrificing your principal.

If you cash out the entire annuity, you may only receive current account value, which could be dramatically lower than your original investment or your earnings during high points in the market. Also keep in mind that you will likely be subject to a surrender charge if you cash out during the first seven years of your annuity. Typically, this is 7% during the first year and it decreases by 1% each year until it dissolves in year seven.

— For more ways to save, spend, invest and borrow, visit MainStreet.com.