Annuities provide guaranteed income and potential tax benefits, making them appealing for retirement planning. However, they can be riddled with high fees and complexity. In today's interest rate environment, high-yield savings accounts, offering rates near 4%, often provide a better alternative for keeping extra cash. Annuities have drawbacks like illiquidity during the surrender period and opaque fee structures, suggesting a thorough review before committing. Thus, individuals should weigh their options carefully to determine the most suitable investment for retirement income.
Annuities can come with various fees, including ongoing management fees and surrender fees. Plus, you'll often pay a fee just to put an annuity in place.
Not only can annuities be very complex, but they come with a few key drawbacks that don't apply to savings accounts.
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