I hope to retire in 2 years and have an annuity earning 7%. But I only work part time and need some cash. What’s my move?

Question: “I have an annuity and it made 7%. I only work part time so I could use some financing. I hope to retire in two years but I will need to withdraw part of it within a year. What options do I have? What is the appropriate expert to consult in this situation?”

Answer: The good news here is that you do have options, some just might be more costly than others. And consulting with a financial adviser who specializes in retirement income,might help you figure out the best path forward.

There are other things to consider too. Your age is also a factor in taking withdrawals, so you’ll want to model the cost savings when withdrawing at different intervals. Investment fiduciary Arvind Ven at Capital V Group notes that if you’re under age 59.5, turning income on can give you a 10% IRS penalty in addition to income taxes. “You may want to wait until that age to avoid the 10% penalty, however the 72(t) provision [also known as substantially equal periodic payments] may offer you an escape route. If possible, the best option is to wait until age 59.5 to turn on income,” says Ven. Basically, the 72(t) rule allows for penalty-free withdrawals from IRAs or retirement plans before age 59.5, though ordinary income tax still applies.

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Fixed and Variable annuities are suitable for long-term investing, such as retirement investing. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply. Variable annuities are subject to market risk and may lose value