The greatest threat to a fixed annuity is the gradual erosion of buying power over time. 5 Reasons Why People Hate Annuities - Trajan Wealth
The case against annuities often centers on their high costs, lack of flexibility, and the risk that they may not keep pace with economic changes over a decades-long retirement. While marketed as "personal pensions," the trade-offs required to secure that guaranteed income can significantly erode your overall wealth. 1. Prohibitive Fees and Hidden Costs don t buy annuities
Variable annuities can carry annual fees exceeding 3%, including mortality and expense (M&E) risk charges, administrative fees, and management fees for underlying subaccounts. The greatest threat to a fixed annuity is
In some flexible-premium contracts, every new contribution starts its own multi-year surrender clock, effectively keeping your capital illiquid indefinitely. 3. Inflation and Purchasing Power Risk effectively keeping your capital illiquid indefinitely.
Most contracts impose steep penalties—sometimes as high as 10% or more—if you withdraw funds during the first 6 to 10 years.
Optional features like death benefits or inflation protection add further annual expenses, potentially eating into the very returns they are meant to protect. 2. The "Liquidity Trap" and Surrender Charges
