Is an annuity still worth it in today's economy? Experts weigh in
Summary
Annuities are insurance products that pay you steady income, often used for retirement. Experts say annuities can be useful now because they offer guaranteed payments and higher interest rates than some other safe investments, but rising inflation and the need for quick access to cash may make them less ideal for some people.Key Facts
- Annuities provide a fixed income stream, helping protect against unpredictable markets.
- Current interest rates on annuities are relatively high, sometimes better than certificates of deposit (CDs) or savings accounts.
- Annuities have earned better returns than bonds over the past 10 years while keeping similar safety.
- Some annuities come with extra features (riders) that help cover long-term care costs, which have increased significantly since 2019.
- Inflation is at 3.8%, the highest in nearly three years, which can reduce the buying power of fixed income from annuities.
- Inflation also increases the need for liquidity, or easy access to cash, which annuities usually limit.
- Experts caution that annuities are not a perfect choice for everyone and recommend careful research before buying.
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