annuity for retirement

Buying an annuity can be one of the smartest moves you make for retirement… or one of the biggest regrets.
It all comes down to understanding what you’re buying—and what to avoid.

Let’s take a look at the top 5 annuity mistakes retirees make (and later wish they didn’t). If you’re asking “Should I buy an annuity?”, this is the guide you need before you sign anything.

🧠 First, What Is an Annuity?

An annuity is a contract between you and an insurance company. You pay a lump sum or series of payments, and in return, the insurer provides income—either for a fixed period or for the rest of your life.

Annuities are popular for retirement because they can offer:

• Guaranteed income for life
• Tax-deferred growth
• Principal protection (with certain types)

But not all annuities are created equal—and mistakes can cost you tens of thousands of dollars over time.

❌ Mistake #1: Buying the Wrong Type of Annuity

There are several types of annuities:

• Immediate
• Fixed
• Variable
• Fixed Indexed (FIA)

Each has its pros and cons, but the worst mistake is buying based on a sales pitch—not your actual retirement goals.

🔍 Fix it: Work with a fiduciary or annuity expert who helps you understand which annuity fits your need for growth, safety, or guaranteed income.

❌ Mistake #2: Ignoring Fees and Surrender Charges

Some annuities (especially variable annuities) come with layers of hidden fees, including:

• Mortality & expense charges
• Administrative fees
• Fund management fees
• Rider charges

Add it up and you could lose 2–4% of your balance annually.

💡 Fix it: Ask “What are the total annual fees, and how do they impact my long-term growth?” Also, be sure to ask about surrender charges—penalties for taking out money too early.

❌ Mistake #3: Not Planning for Inflation

Many retirees lock into an annuity that pays the same amount every month for life.

Sounds great—until prices rise and your fixed income doesn’t.

Without an inflation-adjusted income stream, your purchasing power could slowly erode over time.

📈 Fix it: Consider annuities with inflation riders, or pair an annuity with other investments to hedge against rising costs.

❌ Mistake #4: Using All Your Retirement Savings

Don’t throw your entire nest egg into an annuity. Once it’s in, access can be limited. This can cause major headaches in an emergency or if your health changes.

🚫 Fix it: A good rule of thumb: Allocate only the portion of your portfolio needed to guarantee essential income. Keep the rest liquid and diversified.

❌ Mistake #5: Thinking Annuities Are All Bad (or All Good)

Some people think annuities are a scam. Others think they’re the retirement holy grail.

The truth? Annuities are tools—not magic wands. They work incredibly well when used strategically as part of a well-balanced retirement plan.

✅ Fix it: Don’t buy the hype or the hate. Talk to someone who will run real-world projections and explain the tradeoffs clearly.

📊 So… Should You Buy an Annuity?

If you want to:

• Create guaranteed income you can’t outlive
• Shift retirement risk off your shoulders
• Add stability to your retirement portfolio

…then yes, an annuity could be an excellent choice.

But don’t go at it alone. Work with professionals who aren’t just selling products—they’re solving your retirement puzzle.

At The Policy Shop, we specialize in helping retirees make smart annuity decisions—no fluff, no pressure.

✅ Final Word: Annuities Can Be Powerful—If Done Right

Avoiding these 5 common mistakes could mean the difference between:

• Worry-free retirement income vs. locked-up money you can’t touch
• Growing income that keeps up with inflation vs. fixed payments that lose value
• Financial peace of mind vs. regret and frustration

Let’s make sure your annuity strategy supports your goals, your timeline, and your future.

📞 Have questions? Schedule a free annuity review at:
👉 The Policy Shop