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Keep in mind that your variable annuity has two stages. The accumulation phase, the one your are in, is when it grows. It can also be annuitized. Then the cash value of your account is converted to a contract usually to pay you a fixed amount per month for life, sometimes to you or your spouse, or sometimes for a guaranteed number of minimum payments. Once annuitized, the money belongs to the insurance company and you get only the benefit provided under the contract. It is no longer in your estate, and your heirs get nothing on your death (unless you selected a minimum pay period of say 20 years).

You can buy an annuitized annuity directly. That is called an immediate fixed annuity. So when your rep suggests a fixed annuity, is that an investment in the accumulation phase or an annuitized contract? If in the accumulation phase, you will want to know what yield they are offering. With interest rates so low fixed income investments are difficult these days. is showing the national average yield for a 5 yr CD is 2.0% right now. The max is 2.6%.

Your idea of securing the funds in a money market is great for preserving capital, but the interest rate is likely to be well below 1% these days.

Note that you can move your annuity tax free to any other annuity company using a 1035 transfer. So if Vanguard, Fidelity, T Rowe Price, TIAA Creff or others can give you a better deal, don't worry about the income tax part. You may still have surrender charges to pay on your existing one, but that seems doubtful after 17 years. Moving your funds may mean a new sales charge and restarting the surrender charges clock.

If you need the income, annuitizing your contract could be a good deal for you. Then you don't have to worry about things. The insurance company takes the risk. Your rep should be able to tell you how much you can expect with the various choices.

Your plan to invest part of the funds for better returns is fine. You take on a bit more risk and hope for better returns. But the bottom line is you need to develop an overall retirement plan. How much do you need to retire? Where will the funds come from? How much from pension? Social Security? Other sources? Then you can begin to see how much risk you can afford to take to fund your retirement.

Good luck to you.
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