The Truth About Why Annuities Have a Bad Reputation

You've probably heard someone say it outright: annuities suck, I got burned, total waste of money. It happens often enough that it's worth exploring where that reputation actually comes from, rather than just accepting or dismissing it outright.

A note before you keep reading: what follows is largely my professional opinion and interpretation, based on years working in this business, not a universally agreed-upon conclusion.

Where the Skepticism Usually Comes From

In my experience, when someone feels this way, it usually comes down to one of two things.

The first is overconfidence in their own ability to navigate market timing and sequence of returns risk. Someone convinced they can outmaneuver a market downturn, or that averages will bail them out over time, sees a guaranteed income product as unnecessary, even beneath them. Then a bad three years hits at exactly the wrong point in retirement, the math turns against them in a way averages never warned them about, and the annuity they dismissed starts looking a lot smarter in hindsight. By then it is either too late, or far more expensive to fix.

The second is simpler. They never actually took the time to understand how the product works. An old-style annuity, a bad experience with a variable annuity loaded in fees, or secondhand horror stories from someone else's bad contract, and the whole category gets written off without ever separating the products that deserve the criticism from the ones that do not. That is understandable. It is also a mistake. Writing off an entire tool because one version of it was built poorly is like swearing off cars because you once drove a lemon.

Neither of those reactions means the underlying strategy is flawed. It usually means the person is either betting more on their own market timing than the odds support, or they are reacting to a bad experience without doing the homework to understand what a properly structured Pension Strategy actually does.

This reputation problem is only part of the picture. There are also real, structural reasons annuities rarely come up in a typical financial advisor's process at all, reasons that have nothing to do with whether the product works. Read Why Don't More Financial Advisors Use Annuities?

Where I Fit Into This

I am an income specialist. That is the entire focus of my practice. I do not manage portfolios, pick stocks, or compete with the work a financial advisor does for you. I stay in my lane, and it is a different lane than theirs. Many of my clients still have a financial advisor managing their investments, and that is exactly how it should work. My role is to build the guaranteed income piece of the plan, the part that does not move with the market, so the rest of your money can keep doing what it does best.