Annuity123 is dedicated to providing Americans with unbiased information about retirement, answering the tough questions you want to know.

With hundreds of articles on every retirement planning topic you can think of, peace of mind is just a click away.

Top 3 Reasons Not to Buy an Annuity

Anton Hendler

We spend so much time dwelling on why you should buy an annuity that we never go over some reasons not to do so. Also there are some myths out there regarding annuities that we hope to dispel.

First, let us make the point that not all annuities are the same. We work primarily with Fixed Index Annuities which have little to nothing in common with, say, a variable annuity. For the purposes of this article for annuities read Fixed Index Annuities (FIA).

1) Your money is tied up and you are liable for surrender costs

This is true but one knows this at the outset. Certainly, if you need access to your money in the short-term then an annuity is probably not for you. Remember though that there are plenty of options available so don’t discount the annuity option without checking if there is a product which matches your circumstances. Surrender costs are the insurance companies’ way of making sure that you leave your money with them so they can have the medium to long term opportunity to make it work for you. You will always have access to your penalty-free withdrawals after 1 year-usually 10%. Even with a CD, you will pay a penalty to cash out early.

2) You can do better invested in the market

Again, this is true. You only ‘share’ in the market growth with a FIA. This is a comparatively small price to pay for never sharing in any downside risk. If protection of your principal is a concern then a FIA is an option. If you want to maximize growth in an up year, and can afford to take a loss if the market moves against you, then FIAs are not for you.

3) You don’t need Lifetime Income

If you are in the fortunate position to have sufficient capital to support your lifestyle then you may well not need an annuity-or certainly you would probably not need the income rider which would provide you with an income you cannot outlive. This rider comes with an additional cost (usually around 1% pa) and without it you would still get a share of the market upside with no downside risk in your annuity principal. You may want to have your ‘safe’ money in an annuity with the balance invested elsewhere such as in the market.

As with any retirement vehicle, you have options and, as always, your unique circumstances will dictate the best option or options open to you. The assistance of your advisor is paramount in enabling you to make the correct “informed” choices.

Click on the video box below to watch one of Anton’s partners talk about this topic:

About the Author:

Anton Hendler is the founder of Hendler Financial Group, which is an Independent Financial Group specializing in areas of financial expertise including Taxation, Retirement, Social Security Planning, Retirement Income Planning and Estate Planning.  “Our Mission is to provide and empower our clients with the information, education and resources necessary to make intelligent and long lasting sound financial decisions, making a profound impact on their lives and well-being. 

“Call us toll-free at (888) 574-1115 or visit our website at the to see what we can do for your retirement.”


Annuity123 does not offer insurance, investment, or tax advice.  You should always seek the guidance of qualified and licensed professionals concerning your personal insurance, investment, or tax matters.  Annuity123 is simply a platform allowing retirement planning professionals to help educate the community on various retirement planning topics.  Annuity123 does not directly support or take responsibility for ensuring the accuracy of the content displayed in the articles themselves or any feedback that may get added in the Comments section from the community.

Leave a Reply

Your email address will not be published. Required fields are marked *