What Most People Get Wrong About Annuities: The Top 5 Myths Debunked
If you’ve ever searched for information on annuities, you’ve likely seen mixed opinions—some calling them powerful retirement tools, others calling them a mistake. The truth lies somewhere in the middle, and it starts with understanding what annuities actually are—and what they aren’t.
Let’s break down the five most common annuity myths and get to the truth behind them.
Myth #1: Annuities lock up your money forever.
Many people think putting money in an annuity means saying goodbye to flexibility. In reality, most annuities allow 10% penalty-free withdrawals annually, and some even offer liquidity features like return of premium or enhanced access during long-term care needs. It’s all about choosing the right product.
Myth #2: Annuities are too expensive.
Not all annuities carry high fees. In fact, fixed annuities and fixed indexed annuities often come with no annual fees at all. Fees are typically associated with optional riders, such as guaranteed income or enhanced death benefits—and these can offer significant value depending on your retirement goals.
Myth #3: If I die, the insurance company keeps my money.
This is one of the biggest misconceptions. Most annuities allow you to designate beneficiaries, so any remaining value passes directly to your loved ones—avoiding probate. Some contracts even include enhanced death benefit riders for additional protection.
Myth #4: Annuities don’t grow fast enough.
Compared to riskier investments like stocks, annuities offer safer, more predictable growth. Fixed indexed annuities, for example, provide market-linked upside potential with no downside risk—making them ideal for conservative investors who want growth without volatility.
Myth #5: I’m too young to consider an annuity.
Many pre-retirees in their 40s and 50s are using annuities to lock in guaranteed income later or preserve tax-deferred growth. The earlier you start planning, the more options you have.
At Diversified Insurance Brokers, we help clients separate fact from fiction so they can make informed, confident retirement decisions.
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https://www.diversifiedquotes.com/current-annuity-rates/
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