Annuities: Worth It or Wall Street's Worst Idea?

The good ones

• Single Premium Immediate Annuity (SPIA) — give an insurer a lump sum, get monthly income for life. Simple, low-fee, real longevity insurance.
• Deferred Income Annuity (DIA / longevity annuity) — buy at 65, payments start at 80. Cheap protection against outliving your money.

The bad ones

• Variable annuities with rider fees of 3–4% per year. Pretty wrappers around expensive mutual funds.
• Indexed annuities with complex participation rates and caps. Sold as "market upside, no downside" — reality is usually 2–4% returns net of fees.
• Multi-year guaranteed annuities (MYGAs) at rates barely above CDs but with surrender penalties.

When an annuity actually helps

• You have no pension and worry about running out of money.
• You want to lock in income for essential expenses, separate from market risk.
• You have enough other assets that an annuity is one bucket, not the whole plan.

When to walk away

• Anyone pitches you an annuity in your IRA — they're stacking tax-deferral on tax-deferral. No point.
• The commission is over 5% (it's almost certainly bad for you).
• You can't explain the contract in two sentences.

Bottom line

A SPIA covering basic expenses can be the cheapest peace-of-mind in retirement. Almost everything else with "annuity" in the name is sold, not bought — proceed with extreme skepticism and a fiduciary second opinion.