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Hi. I've got an annuity from years back before I was Foolish enough to realize what a poor deal they are, so I'd like some advice about whether to bail out of the annuity completely (take the lump sum and run) or go ahead and annuitize it.

The total amount is about $12,000 and can be lump-sum withdrawn or annuitized any time now. There are the usual different options for how I could take it--guaranteed for life, fixed period certain, and so on. My current age is 60 and my life expectancy due to chronic illness is only about 72 at most. I do not have a spouse who would continue receiving annuity payments after my death, so a drawn-out payment structure seems like it would be of no benefit to me. I'm being taxed in the 15 percent bracket for the next couple of years while I continue working part-time, but starting a couple of years from now I don't expect to have much (if any) tax liability at all.

My retirement financing will come from a combination of part-time work for the first couple of years, SS benefits which start at age 62, and interest/principal drawn from an IRA account. The IRA account has earned around 10% annually the last several years, but earned 82% this past year thanks to the booming stock market--even with that recent big leap, it stands only at about $20,000 total right now.

My basic question is, would I do better to move all the money from my annuity to my IRA account through a lump-sum withdrawal rather than annuitize that money? Or, since I've already eaten the costs of management fees and insurance product fees for years by purchasing the annuity in the first place, is there some kind of advantage I can get out of it by annuitizing it and starting distributions? In other words, is an annuity always something to run away from as soon as one realizes it's a bad investment, or should those of us who got stuck with one years ago now go ahead and utilize the distribution phase of the annuity rather than taking a lump-sum withdrawal?

Thanks for any advice you can offer.
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