Annuity Guys®

Annuity Rates, Features & Ratings: America's trusted annuity resource. Compare best options for hybrid, index, fixed, variable & immediate annuity quotes.


Helping You Create Great Results Your Retirement Deserves!



(217)753-1515
  • Home
  • About Us
    • About Us
    • Contact Us
    • Site Terms & Disclosure
    • Privacy Policy
  • FAQs
    • Most Frequently Asked Annuity Questions
  • All Annuity Guys Videos
  • Annuity Types
    • Best Annuity Reviews
    • Market Free™ Annuities
    • Choosing an Annuity
    • Deferred Annuities
    • Hybrid Annuity Choices
      • Hybrid Annuity Pros&Cons
      • Hybrid Income Riders
      • Hybrid Annuity Guarantees & Strategies
    • Fixed Annuity Choices
      • Fixed Annuity Performance
      • Better Fixed Annuities
      • Fixed Deferred Annuities
      • Fixed Rate Annuities
      • Fixed Annuity Alternatives
      • Fixed Annuity Pros & Cons
      • Fixed Annuity Negatives
    • Index Annuity Choices
      • Fixed Index Annuity Features
      • Fixed Index Annuity Performance
      • Better Fixed Index Annuities
      • Fixed Index Annuity Alternatives
      • Fixed Index Annuity Pros & Cons
      • Fixed Index Annuity History
      • Fixed Index Annuity Negatives
    • Immediate Annuities
      • Immediate Variable Annuity
      • Immediate Fixed Annuities
    • Variable Annuities
      • Variable Annuity Features
      • Better Variable Annuities
      • Variable Annuities Disadvantages
      • Variable Annuity Alternatives
      • Variable Annuity Negatives
      • Variable Annuity Performance
    • Pre-Issued Annuities™
      • Hybrid Annuities versus Pre-Issued Annuities ™
    • Annuity Glossary
  • Articles
    • How Do MarketFree™ Annuities Work?
    • Are Annuities Safe?
    • Living Benefits
    • FIA Performance
    • Beware of FIAs?
    • Annuities & Retirement
    • Annuities & Estate Tax
    • Rollovers & Annuities
    • Annuities & Tax
    • Charity & Annuities
    • The Lost Decade
    • Best Annuity Videos
    • Social Security Benefits
  • Calculators
    • Retirement Planning Calculator — Basic
    • Retirement Shortfall Calculator — Basic
    • Immediate Annuity Calculator & Quotes
    • Fixed Index Annuity Calculator & Fixed Annuity Calculator
    • Variable Annuity Calculator & Hybrid Annuity Calculator
  • Blog
    • Annuity Guys® Weekly Annuity Video Blogs
  • Get Annuity Guys Help
    • Request Annuity Guys’ Planning Help Today
You are here: Home / Archives for Top 5

Top Five Reasons Not to Buy an Annuity

July 26, 2012 By Annuity Guys®

What are the top five reasons not to allocate funds to an annuity? Based on many years of experience and an informal office survey the top five reason are…

  1. Too old or too young.
  2. A lack of sufficient assets.
  3. Expectation of an unrealistically high return.
  4. Probability of needing annuity dollars prior to maturity.
  5. Missing a reasonable understanding of how annuities work.

Dick and Eric examine these five reasons in this weeks commentary.

[embedit snippet=”video-specialist-button”]

 

**Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. During this segment, Dick and Eric are referring to Fixed Annuities unless otherwise specified.

Annuity Guys® Video Transcript:

Dick: We have an empirical study. Is that correct, Eric?

Eric: The Top Five?

Dick: The top five reasons why a person should not buy an annuity.

Eric: Yeah, that’s right.

Dick: And where’d this empirical study come from, Eric?

Eric: Well, we did a survey here in the office.

Dick: Of you … and I…

Eric: That’s right, the two of us.

Dick: So we have a slight margin of error.

Eric: It’s plus or minus five.

Dick: Five, yeah. We don’t know why five.

Eric: The five reasons that you shouldn’t buy an annuity.

Dick: Yeah, but we do really run into some very legitimate reasons. Why folks should not buy an annuity and people should know about that.

Eric: That’s right.

Dick: Reason number one, too young.

Eric: Too old.

Dick: Or too old. Age, that’s right. Let’s take the extreme ends, let’s say, too old. How old is too old?

Eric: Too old is when you start to lose benefits, so it’s age 81.

Dick: They’re gone, basically.

Eric: Basically, very few choices left.

Dick: Right, a few companies will give you a little bit, but usually the yields are low and there are no additional riders or benefits, this type of thing. One real exception to that now, on the 80-year-old, is if we find that they have a younger spouse.

Eric: Okay, and then that makes it a good deal, because the spouse is…

Dick: The spouse can get a lot of benefit, by putting the annuity in their name.

Eric: Right, so really they’re still within the guidelines of getting some of those benefits.

Dick: Right, so that does work well. Let’s go to the other extreme. Let’s talk about the younger. When’s it too young?

Eric: Well, definitely before, I would say age 25, but anything younger than that…

Dick: 16-year-olds, no way.

Eric: It’s obvious, but most of the time there, you’re in your stock accumulation stages.

Dick: Right, you might make a case occasionally, for someone in their early thirties, but probably somewhere in your mid-thirties to early forties, before it starts to make real sense, depending on your risk aversion, I would say.

Eric: Most of these income benefits are usually set for a 10 or the maximum I’ve seen, is a 20-year period, so really it’s the 20 years prior to retirement. So if you think of 65 being the logical retirement age, really your mid-40’s; when you get to 50, you definitely should be…

Dick: Yes, you should be moving in that direction or have a plan.

Eric: So really before that it’s another bucket, you’d probably not fit. So that’s reason number one, reason number two…

Dick: You don’t have enough assets.

Eric: You don’t have a nickel to rub.

Dick: I mean really, folks, and Eric and I were discussing this prior to going on camera here. If you’ve got less than $100,000 dollars in overall assets and we’re not talking about your home, or your furniture, or your car. We’re just saying if you’ve got less than $100,000, realistically you just don’t know what’s going to come up. You don’t know what kind of an emergency situation you might have, and it’s probably wise, not to put that money into an annuity.

Eric: We call it the liquidity issue. You don’t have enough liquid assets, to be able to do and take care of the things that may come up, and you definitely don’t want to put all of your eggs in one basket.

Dick: Correct.

Eric: So when you’ve got limited assets…

Dick: Right. It’s really iffy, and there’s always an exception. There’s going to be some exception that’s going to come along, where someone has lots of income and they may not be worried about needing liquidity.

On the other hand, I’ve seen a few situations where someone had so little income that they needed an annuity to produce enough income, just so they could live on and know that they weren’t ever going to run out of money. So there is this balance. You have to look at each person’s situation and evaluate it to be fair.

Eric: But largely, basically you have to have, typically $100,000.

Dick: Or more, and then I guess the other caveat to that, though I would say is a lot of people may only want a $75,000 dollar annuity or $125,000, but they’ve got several hundred thousand dollars in other assets.

Eric: Right, it’s an allocation.

Dick: It’s an allocation.

Eric: So we’re not saying you have to use $100,000 up. We’re saying if you don’t have at least $100,000 available, then that’s not a wise choice.

Dick: Right, moving on.

Eric: Number three, expectations of unrealistic, high returns. Annuities are a safe, stable allocation.

Dick: That’s right.

Eric: So if you don’t get, if you don’t have high risk, you don’t have high reward. You have more of a level, safe, stable…

Dick: Right. Your reward is sleeping securely at night. Sleep insurance, and knowing that you’re not going to be affected by the ups and downs of the market or of a Japanese-style situation, where the market loses 75% of its value and it doesn’t return over a 20-year period.

Eric: Right. As long as you expect, if you’re using it for income, primarily it’s a great vehicle.

Dick: You don’t have of longevity risk. It doesn’t matter how long you live, right? So it’s great for the pension-style income.

Eric: Yeah, perfect.

Dick: And growth, growth can be reasonable.

Eric: We always talk about beating the bank, by a couple percentage points.

Dick: And then if we wanted to pre-issue annuities, it could be maybe higher than that, so maybe we’re beating the bank by thre3.0-4.0%.

Eric: Yeah, so it’s expectations. If you want your cake and eat it too, this is not the vehicle for you. Because I’ve had people ask me, “I want the cake-and-eat-it-too annuity.”

Dick: Right.

Eric: Well, you have to pick and choose, and it doesn’t exist in the double-digit community.

Dick: Well, and this is where I find that people have a lot of unhappiness with the annuity they purchased, when an advisor has told them that they’ve got this unlimited upside potential and no downside risk, and they’re expecting something pretty close to a stock market gain, when the market’s going well and they don’t have it and they’re disappointed, because they were over-sold, overstated, under-delivered.

Eric: No, so don’t buy an annuity if you have unrealistic high-return expectations. All right, so number four, the probability of needing annuity dollars prior to maturity.

Dick: Well and when we say probability, there’s always a possibility for anyone that they could need the money, but if we talk of it in terms of probability we have to use some reasonable assumptions. And if you’ve got plenty of income, you’ve got other assets then the probability when you put your money in an annuity should be very, very low that you’re really going to need this money for anything.

Eric: Right, I mean if you go into it with the expectation of saying, “I’m going to go buy a new house in three years, I might use that money.”

Dick: I might use that money.

Eric: Don’t put the money there to begin with.

Dick: No, it makes no sense.

Eric: It’s not a good decision. So that one pretty much stands on its own.

Dick: Yeah. And number five, this is probably my favorite.

Eric: This is my favorite. It’s truly the number one reason not to buy an annuity and that’s that you don’t have a reasonable understanding of how annuities work.

Dick: Right. Before you can make an intelligent decision on an annuity, and there is a certain degree of perplexity and sophistication to an annuity, you need to really work with an advisor that gets it. That has access to multiple annuities. That has a great understanding of these annuities. How they work, how they inter-relate and function, and someone that can help you to understand. Not that you’re going to have the same knowledge level that the advisor has.

Eric: And I don’t think they have to understand how every annuity works. You have to understand how what you own works, the ins, the outs.

Dick: And that it’s going to meet your objectives… your stated objectives.

Eric: I talk to clients about working backwards. You work backwards from the goal and then find the annuity or the pieces that fit that goal. But you have to understand how it works and how that piece works as part of your goal. If you don’, and if you’re not comfortable, don’t do it.

Dick: Yeah, you shouldn’t do it. You’ve got to be careful. There is a point sometimes where you do rely on the advisor’s expertise, because you do have certain stated objectives, so there is this balance that you have to hit, but you do want to at least a cursory understanding of what it is you’re doing, why you’re doing it, how it works.

Eric: Right. Don’t spend more time planning your vacation than you spend planning your retirement.

Dick: That’s right, or understanding your annuity. So folks, these are the five top reasons that we’re aware of.

Eric: And based off our empirical survey.

Dick: Yes, yes, and so we think that this will give you a good basis as you’re considering putting money into an annuity, doing an annuity allocation. If these don’t really apply to you, then an annuity may be a good choice.

Eric: Good deal, I think we’ve hit the top five.

Dick: Next week, maybe we’ll talk about the five least reasons not to buy an annuity.

Eric: We’re having too much fun, we’d better go.

Dick: Thank you.

Filed Under: Annuity Commentary, Annuity Guys Video Tagged With: annuities, Annuity, Purchase An Annuity, Reasons Not, Top 5, Top Reasons

 

Empowering Annuity Reference Book

 
DOWN-LOAD NOW - FREE!
  • Annuity Guys Reference Book - 250 pages of Annuity Facts

  • "The New Retirement"
    Annuity Reference Book 
    Free Instant Download
  • Confidential - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.

 

  • Avoiding Annuity Gimmicks, Amateurs, & Charlatans!

    Avoiding Annuity Gimmicks, Amateurs, & Charlatans!

    Everyone loves a good practical joke – until the joker happens to be the salesperson who just sold you an annuity …Read More »
  • Annuities Make Life Better for Retirees – Study Reports

    Annuities Make Life Better for Retirees – Study Reports

    Would you rather be happy and optimistic in retirement or worried about spending too much? We know it sounds like …Read More »
  • Five Top Annuity Safety Risks to Avoid

    Five Top Annuity Safety Risks to Avoid

    Annuities are safe, secure, and without risk…. hmm, well not exactly. As Annuity Guys® we expound quite a bit on the safety …Read More »

Revealing Fun Video: Fiduciary Advisors Vs. Annuity Salesmen
MUST KNOW FACTS 90% of
ANNUITY ADVISORS AVOID TELLING!
  • *FIDUCIARY RETIREMENT REVIEWS
    Second Opinions Improve Retirements
     
    "For Your Retirement's Success"
     Choose a *Fiduciary Advisor who gives you Full Disclosure of Cost & Selection.
     
    Material Fact 1:
      About 90% of advisors ARE NOT REQUIRED by law to do what is best for their clients!
     
    Material Fact 2:
     Fiduciary Advisors ARE REQUIRED by law to do what's best for their clients! 
     
      Hence, clients of a fiduciary can know that their advisor chose the highest legal standard required by law to work strictly for their highest good.
     
     We estimate Fiduciaries are less than 10% of total U.S. financial service providers. Fiduciaries are held to the highest client legal standard of financial planning and investment advice.
     
     The other 90% are sales oriented advisors, brokers, bank reps, registered reps. & insurance agents, selling products on a much lower suitability legal standard, not necessarily what's best for their client!
     
       Fiduciaries also must disclose conflicts of interest that could potentially bias their advice, such as; selling products that pay them higher commissions having higher fees or costs, and their lack of investment product access limiting their client's opportunities, to name a few.
     
    Choosing your advisor can have
    "The Largest Single Impact on
    Your Retirement's Success or Failure"


  • Fed Up with Exaggerated Annuity Claims?

    Fed Up with Exaggerated Annuity Claims?

    There is a saying in the annuity world that annuities are sold, not bought! Yes, at times this may be …Read More »
  • Choosing a Fixed Annuity

    Choosing a Fixed Annuity

    If you are having trouble sleeping, you could count sheep or think about fixed annuities.Solid, unexciting, stodgy and downright boring …Read More »
  • Choosing Annuity Potential or Income **Guarantees

    Choosing Annuity Potential or Income **Guarantees

    Have you ever heard the quip “It can be hard to remember that the objective was to drain the swamp …Read More »
  • Annuity Ratings, are they Believable?

    Annuity Ratings, are they Believable?

    U.S. to sue S&P over Ratings – that was this years’ February 5th headline in the Wall Street Journal. If the federal government …Read More »
  • “I Hate Annuities” “Secret Annuity Strategy”<br>Internet & TV Gimmicks!

    “I Hate Annuities” “Secret Annuity Strategy”<br>Internet & TV Gimmicks!

    Negative statements and hyperbole inherently make strong headlines, grabbing our attention! The financial industry is very guilty of using this …Read More »
  • Choosing a Hybrid Annuity

    Choosing a Hybrid Annuity

    Why are so many folks choosing hybrid annuities for their retirement?Let’s summarize the four key elements most retirees are looking for that make …Read More »
  • Annuity Diversification – What Amount Per Company?

    Annuity Diversification – What Amount Per Company?

    You may have invested, scrimped, and saved most of your life for just this moment. Yes, you are ready to …Read More »
  • Why Should Anyone Rely on an Annuity?

    Why Should Anyone Rely on an Annuity?

    By protecting your income foundation with an annuity or annuities — and including Social Security and/or a pension as non-commercial …Read More »

View Our Newest Videos! Subscribe Now
  • Annuity Guys Videos - Annuity Answers
  • New Annuity Guys Videos
    Our Entertaining & Informative
     Saturday Morning Video Blog
  • Timely Retirement & Annuity Issues - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.


  • Choosing an Immediate Annuity

    Choosing an Immediate Annuity

    In the golden era of career based retirements, everyone could count on a company paycheck for life in retirement. Unfortunately, in …Read More »
  • How Much Money is Enough to Secure Your Retirement?

    How Much Money is Enough to Secure Your Retirement?

    It’s important to differentiate what you need for retirement security versus what you would desire if all your investments go …Read More »
  • Annuity Guys® Verified Reviews

    We highly value your reviews. Please help other site visitors learn from your experience. Reviews are verified based on a …Read More »
  • 100% Money Back Annuity **Guarantees!

    100% Money Back Annuity **Guarantees!

    Most big ticket purchase come with a warranty or a **guarantee – including annuities. Did you know that all annuities …Read More »
  • Ten Factors Determining the Least You Need in Annuities

    Ten Factors Determining the Least You Need in Annuities

    One of the biggest challenges facing pre-retirees is knowing the amount of income they will need in retirement to live …Read More »
  • Choosing a Great Retirement Advisor for Financial Planning

    Choosing a Great Retirement Advisor for Financial Planning

    Remember the yellow page ads from years ago – “Let your fingers do the walking, it’s a snap!”The yellow pages …Read More »
  • What is the Best Annuity?

    What is the Best Annuity?

    Are you trying to figure out which annuity will offer the best way to grow your money and safely generate …Read More »
  • Hybrid Annuities as an Inflation Hedge

    Hybrid Annuities as an Inflation Hedge

    Inflation – this one word strikes terror in the hearts of many retirees on a fixed income.Never to fear, we have a cost of …Read More »
Get Newly Released Annuity Guys® Videos on Saturday Mornings
  • Annuity Guys Videos - Annuity Answers
  • New Annuity Guys Videos
    Our Entertaining & Informative
     Saturday Morning Video Blog
  • Timely Retirement & Annuity Issues - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.


  • Millions of Pensions Dumped – Can Annuities Fill the Gap?

    Millions of Pensions Dumped – Can Annuities Fill the Gap?

    Every time you turn on the news it seems we are bombarded with information on pension reform or the scaling back …Read More »
  • Beware of Best Annuity Claims (also known as) Sales Hype!

    Beware of Best Annuity Claims (also known as) Sales Hype!

     When you begin research on annuities via the internet it does not take long before you realize that most salespeople, …Read More »
  • Why Should Anyone Rely on an Annuity?

    Why Should Anyone Rely on an Annuity?

    By protecting your income foundation with an annuity or annuities — and including Social Security and/or a pension as non-commercial …Read More »
  • Is Your Advisor One Annuity Away From a Free Trip to Paris

    Is Your Advisor One Annuity Away From a Free Trip to Paris

    The best annuity… is it the one that is best for you to own or the best annuity for the …Read More »
  • Are Annuity **Guarantees on Their Way Down?

    Are Annuity **Guarantees on Their Way Down?

    “It was the best of times, it was the worst of times.” Dickens often quoted opening to the Tale of …Read More »
  • Do Not Waste Time Considering Annuities, If You…

    Do Not Waste Time Considering Annuities, If You…

    Do not waste your time considering annuities if you cannot find one of the following Annuity Profiles that matches your …Read More »
  • What do Annuities Really Earn? No Hype…

    What do Annuities Really Earn? No Hype…

    Apples and oranges – what do they have in common? Both are fruits!Why would we start a discussion about annuity earnings …Read More »
  • Hybrid Annuity Sales Hit All Time Highs! Do You Know Why?

    Hybrid Annuity Sales Hit All Time Highs! Do You Know Why?

    Record numbers of retirees and savers are flocking to fixed and fixed index annuities – why?For many baby boomers , the great …Read More »
  • Relying on Annuities for Retirement Pensions

    Relying on Annuities for Retirement Pensions

    The private sector has been bailing on providing pensions for employees over the last few decades. Now, it appears legislation to …Read More »
  • Annuity Undo Buttons – Using Your Free Look!

    Annuity Undo Buttons – Using Your Free Look!

    Most big ticket purchase come with a warranty or a **guarantee – including annuities. Did you know that all annuities …Read More »

 

Empowering Annuity Reference Book

 
Start Reading Now - Instant Download
  • Annuity Guys Reference Book - 250 pages of Annuity Facts

  • "The New Retirement"
    Annuity Reference Book 
    Free Instant Download
  • Confidential - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.

 
Comprehensive Site Terms and Disclosure | Privacy Policy | Copyright © 2025 Annuity Guys®


  ** Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. Annuities are not FDIC insured and it is possible to lose money.
Annuities are insurance products that require a premium to be paid for purchase.
Annuities do not accept or receive deposits and are not to be confused with bank issued financial instruments.
During all video segments, Dick and Eric are referring to Fixed Annuities unless otherwise specified.


  *Retirement Planning and annuity purchase assistance may be provided by Eric Judy or by referral to a recommended, experienced, Fiduciary Investment Advisor in helping Annuity Guys website visitors. Dick Van Dyke semi-retired from his Investment Advisory Practice in 2012 and now focuses on this educational Annuity Guys Website. He still maintains his insurance license in good standing and assists his current clients.
Annuity Guys' vetted and recommended Fiduciary Financial Planners are required to be properly licensed in assisting clients with their annuity and retirement planning needs. (Due diligence as a client is still always necessary when working with any advisor to check their current standing.)



  # Investors should consider the investment objectives, risks, charges and expenses of a variable annuity and its underlying investment options. The current prospectus and underlying prospectuses, which are contained in the same document, provide this and other important information. Please contact an Investment Professional or the issuing Company to obtain the prospectuses. Please read the prospectuses carefully before investing or sending money.


  ^ Investors should consider investment objectives, risk, charges, and expenses carefully before investing. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.


  ^ Eric Judy offers advisory services through Client One Securities, LLC an Investment Advisor. Annuity Guys Ltd. and Client One Securities, LLC are not affiliated.