Elaine Silvestrini, Annuity.org Writer
  • Written By
    Elaine Silvestrini

    Elaine Silvestrini

    Financial Writer

    Elaine Silvestrini is an advocate for financial literacy who worked for more than 25 years in journalism before joining Annuity.org as a financial writer.

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    Emily Miller
    Emily Miller, Managing Editor for Annuity.org

    Emily Miller

    Managing Editor

    Managing editor Emily Miller is an award-winning journalist with more than 10 years of experience as a researcher, writer and editor. Throughout her professional career, Emily has covered education, government, health care, crime and breaking news for media organizations in Florida, Washington, D.C. and Texas. She joined the Annuity.org team in 2016.

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  • Financially Reviewed By
    Michael J. Boyle, M.S.
    Michael J. Boyle

    Michael J. Boyle, M.S.

    Former Compliance Professional

    Michael J. Boyle began his career in the securities business in 2011 as a registered financial professional. Over his tenure, he’s worked with asset classes including equities, fixed income, CDs, mutual funds, futures, options and foreign currency.

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  • Updated: May 13, 2023
  • 6 min read time
  • This page features 8 Cited Research Articles
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How to Cite Annuity.org's Article

APA Silvestrini, E. (2023, May 13). Selling Your Retirement Annuity Plan. Annuity.org. Retrieved June 10, 2023, from https://www.annuity.org/selling-payments/retirement/

MLA Silvestrini, Elaine. "Selling Your Retirement Annuity Plan." Annuity.org, 13 May 2023, https://www.annuity.org/selling-payments/retirement/.

Chicago Silvestrini, Elaine. "Selling Your Retirement Annuity Plan." Annuity.org. Last modified May 13, 2023. https://www.annuity.org/selling-payments/retirement/.

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Key Takeaways

  • Financial “shocks” such as major home repairs, dental expenses and long-term health needs can shatter retirees’ financial stability.
  • Nearly a fifth of retirees — and a quarter of retired widows — experience these financial “shocks” in their retirement.
  • Selling all or a part of a retirement annuity is one of the few options many retirees have to meet unexpected expenses.

Keeping up with the cost of living in retirement can be a challenge for most Americans, especially in the post-pension age. Some reasons to sell your retirement annuity would be for unexpected expenses, such as medical or dental procedures, major home renovations or the replacement of a vehicle. These things can make financial stability even more difficult during retirement.

A retired woman from Chicago told researchers for the Society of Actuaries: “I’ve had our house upkeep, furnace, driveway. In the last month, I have spent $2,500 on one expense, $3,600 on another expense. That’s in one month. A couple of years ago, my roof went and my furnace went. Everything.”

Retired seniors have few options when it comes to meeting those expenses. Among their limited options is selling all or some of their retirement annuity payments for a lump sum.

Financial ‘Shocks’ in Retirement

The Society of Actuaries studied the effect of “shocks,” unexpected life events for retirees. These include things such as the death of a spouse, entry into a long-term care facility or a major home repair.

According to a 2017 report by the society, about 19 percent of retirees and 24 percent of retired widows experienced four or more shocks during retirement.

Other findings from the report:

  • Shocks add up. Unexpected expenses affect the majority of retirees. Families that deal well with one or two shocks may find it increasingly difficult to deal with added shocks.
  • The most common shocks are home repairs and dental expenses. The two most frequently mentioned financial shock and unexpected expense items are home repairs and upgrades and major dental expenses, as reported by 28 percent and 24 percent of respondents respectively.
  • Lower-income retirees have a rougher time. Almost three in 10 retirees with annual incomes of less than $35,000 had experienced four or more shocks compared with one in 10 retirees with incomes of $75,000 of more.
  • Widowhood has an impact. Sometimes the death of a spouse is totally unexpected. Many retirees indicated that household income dropped as a result of the loss of a spouse, but most said they were able to adjust and manage. For some, household assets also dropped.
  • Long-term health care, divorce and helping children are financial burdens. Retirees struggled most when it came to major health problems requiring paid long-term care or divorce after retirement. Providing long-term support to adult children was also a major issue.

Health Care Costs

The costs of health care in retirement can be overwhelming and sometimes impossible to plan for. Selling annuity payments might help you avoid becoming consumed by medical debt.

A 2018 study by the National Bureau of Economic Research found that households where the head turned 70 in 1992 incurred an average of $122,000 in medical spending, including Medicaid payments, over their remaining lives. For 1 percent of those seniors, their retirement health care expenses will exceed $600,000. The poorest households had a significantly lower risk because Medicaid covers the majority of their costs.

Pro Tip

Although income, health and marital status before retirement have an impact on health care spending in retirement, much of lifetime medical spending is the result of events specific to post-retirement years.

And a report by Fidelity estimates that the average couple will need $280,000 to pay for medical expenses in retirement, not counting long-term care. Among the reasons for this is the fact that people are living longer and health care inflation outpaces the general inflation rate. In addition, Americans, on average, retire at age 62, three years before they’re eligible for Medicare.

Even with Medicare, retirees should expect to pay about $5,000 a year on health care premiums and other out-of-pocket costs, according to the report.

Step 3

Why are you selling your annuity or structured settlement payment(s)?

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Step 3

Who owns the annuity or structured settlement?

Paying Off Debt

Selling annuity payments to get a lump sum can provide relief by allowing you to pay off debt.

In fact, 87 percent of annuity holders reported seeing annuities as a good source of emergency funds when queried in a 2013 Gallup survey commissioned by the American Council of Life Insurers. Also, 83 percent said annuities are an effective way of assuring money is available to pay for a catastrophic illness or nursing-home care.

According to the U.S. Bureau of Labor Statistics, annual pretax income among households led by someone aged 75 or older averages about $35,500, while average annual expenditures were about $36,700, as reported in the 2014 Consumer Expenditure Survey. At more than $13,300, housing was the greatest expenditure for this age group, even though 82.5 percent of that group had no mortgage debt.

Mortgage payments can take up 30 percent of your income or more. If you still have a mortgage in retirement, it might make sense to sell annuity payments to erase that debt and eliminate that monthly bill.

You may also need the lump sum if you want to downsize and need to fund your move to a smaller home that is better suited to your retirement needs.

Avoid Annuity Scams

When you sell your annuity, you risk being taken advantage of by a dishonest annuity purchasing company. This shouldn’t scare you away. Instead, learn the signs of an annuity selling scam so you can avoid it and protect yourself.

Read More: How to Find the Present Value of an Annuity

To Sell or Not to Sell Your Retirement Annuity

While selling annuity payments can be the best option for some seniors, you may want to consider your circumstances and whether holding on to your annuity payments makes more sense for you.

Reasons to keep an annuity:

  • Periodic annuity payments can subsidize the cost of long-term care. Assisted living facility payments can be conveniently deducted from annuity distributions.
  • You may depend on annuity payments for monthly living costs.
  • Annuities can serve as a form of inheritance for a surviving spouse or child.

However, there are circumstances in which selling payments makes sense, including immediate needs that overtake any benefits you are receiving from your annuity and the strength of your financial portfolio.

For example, if you have enough income from your other investments or a pension or have inherited an annuity that isn’t needed to pay your living expenses, you may decide selling the payments could be beneficial.

Due to state and federal regulations, some retirement accounts are not eligible for sale including:

  • Veterans’ benefits
  • Social Security benefits
  • 401(k) or pension benefits
  • IRA accounts
  • Workers’ compensation payments

It’s important to regularly reevaluate your retirement and financial status. At some point, it may be in your best interest to sell your annuity payments.

Get a quick, competitive and easy quote for your payments in minutes!

Turn your future payments into cash you can use right now. Get started with a free estimate and see what your payments are worth today!

Frequently Asked Questions About Selling Your Retirement Annuity

Can you sell a pension before retiring?

While you can cash out an annuity before retiring, pension benefits are not eligible for sale until between the age of 55 or 65, depending on your plan. Pensions, in addition to social security benefits and veterans’ benefits, are subject to state and federal regulations.

Is a retirement annuity the same as a pension fund?

Retirement annuities are similar to pension funds, but they are not the same. Annuities and pensions pay a series of installments to their owners, but employers provide pensions while individuals can purchase annuities independently.

How can you sell a retirement annuity?

You can start the process to sell your retirement annuity by researching potential purchasing companies with the help of your accountant or financial planner.

Next, consult with the potential buyers and obtain quotes. Then, after you consider and accept an offer you will need to submit the necessary documentation for approval. When the entire process is complete, you can then collect your payment.


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Last Modified: May 13, 2023

8 Cited Research Articles

Annuity.org writers adhere to strict sourcing guidelines and use only credible sources of information, including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts. You can read more about our commitment to accuracy, fairness and transparency in our editorial guidelines.

  1. Lee, S. et al. (2014, September). Consumption patterns and economic status of older households in the United States. Retrieved from https://www.bls.gov/opub/mlr/2014/article/consumption-patterns-and-economic-status-of-older-households.htm
  2. Society of Actuaries. (2017). Shocks and the Unexpected: An Important Factor in Retirement. Retrieved from https://www.soa.org/globalassets/assets/Files/resources/research-report/2017/shocks-inexpected-factor-retirement.pdf
  3. Society of Actuaries. (2017). 2017 Risks and Process of Retirement Survey. Retrieved from https://www.soa.org/resources/research-reports/2018/retirement-risk-survey/
  4. Foster, A.C. (2016, September 16). A closer look at spending patterns of older Americans. Retrieved from https://www.bls.gov/opub/btn/volume-5/spending-patterns-of-older-americans.htm
  5. Fidelity Viewpoints. (2018, April 18). How to plan for rising health care costs. Retrieved from https://www.fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs
  6. Jones, J.B. et al. (2018, July). The Lifetime Medical Spending of Retirees. Retrieved from https://www.nber.org/papers/w24599
  7. Farrell, C. (2018, June 28). The Truth About Health Care Costs In Retirement. Retrieved from https://www.forbes.com/sites/nextavenue/2018/06/28/the-truth-about-health-care-costs-in-retirement/#282a035d4401
  8. American Council of Life Insurers. (2013). 2013 Survey of Owners of Individual Annuity Contracts. Retrieved from https://www.acli.com/-/media/ACLI/Public/Files/PDFs-PUBLIC-SITE/Public-Consumer-Info/annuities/2013-Gallup-Survey-test.ashx?la=en