Written by: Mike Milligan, CFP®
Critics hate annuities. They say they’re “bad,” “expensive,” or “too complicated.”
The internet is full of half-truths and quick dismissals. But here’s the thing: annuities are not for everyone, yet for many retirees, annuities are one of the best retirement income strategies that can work harder than anything else to secure a lifetime paycheck.
The problem isn’t annuities themselves, the culprit here is the misunderstanding what annuities actually do. And in retirement planning, misunderstanding can cost you everything.
The Roller Coaster of Perception
At the bottom of the ride, you’ll hear the noise:
- “Annuities lock up your money.”
- “Advisors only sell them for commission.”
- “You’ll never see your money again.”
These claims go viral because they spark fear, but they leave out the facts. As you climb higher, the bigger picture comes into view: annuities can provide what no stock, bond, or mutual fund can, guaranteed retirement income for life.
While the market promises growth and bonds promise stability, neither can guarantee you won’t outlive your money. With the proper strategy and education, Annuities can.
At the top of the ride comes the aha moment: in a world where pensions are disappearing and Social Security faces uncertainty, fixed index annuities and income annuities can fill a crucial retirement gap. They’re not for every dollar in your portfolio, but when used correctly, they can do exactly what critics say they can’t, protect your income, reduce risk, and give you peace of mind.
The Fiduciary Misstep
Some “fiduciaries” reject annuities altogether. But calling all annuities “bad” isn’t fiduciary, it’s lazy. A true fiduciary considers all retirement income solutions, not one size fits all approach business model.
Here’s the part most people miss:
The Good Ending? BALANCE is always the key. Retirement success isn’t about stocks or annuities alone, but getting the right pieces at the right time for you to balance all together.
Growth and liquidity matter, but so does certainty. When structured properly, annuities can create a reliable income floor that allows your other investments to grow without fear.
So are annuities “bad”? No.
Misunderstood? Absolutely.
And for the right retiree, they may be the key difference between just scraping by and truly retiring happy.
Related: Fall Forecast: Why Pessimism, Powell, and Politics Could Fuel a Market Surprise