Annuities are neither good nor bad. ... Planners and others also frame these products in the worst light. They label income annuities as an investment rather than as a guaranteed way to fund spending in retirement, as a way to manage the risk of running out of money in retirement, which is often cited as the No.

Why is an annuity a bad idea?

Reasons Why Annuities Make Poor Investment Choices. Annuities are long-term contracts with penalties if cashed in too early. Income annuities require you to lose control over your investment. ... Guaranteed income can not keep up with inflation in certain types of annuities.

What is wrong with annuities?

Annuities pay extremely high commissions — often 7% or higher of the total amount. So if a client was sold a $200,000 annuity, the salesperson might take home $14,000 up front. Needless to say, there's not a lot of incentive for him to put you in a low-cost index fund.