Annuities often aren’t good investments because they carry high fees, including commissions, administrative charges, and surrender fees that can eat into returns for years. Many annuities lock up your money, penalizing withdrawals before a set age or term, which limits flexibility if you need cash.
Returns on fixed or indexed annuities frequently underperform simple index funds over the long run, especially after fees are factored in. Annuities are also complex, with confusing terms, riders, and caps that make it hard to know what you’re actually getting.
Finally, they’re primarily insurance products designed to guarantee income, not growth vehicles, so using one purely as an investment usually means sacrificing potential returns for a sense of security you may not need.