Help me find this article on annuities

April 27, 2022 4:49 AM

I read an article that convinced me that annuities are a bad idea. I can't find it. Can you?

Here's what I remember.
I think it was in Forbes, but I might be wrong.
It wasn't "pros and cons." It was "annuities are bad."
It was not a numbered list.
It explained that annuities are insurance policies. It gave an example showing specifically how long someone would have to live before they weren't losing money by buying an annuity. So math with specific numbers was involved. It emphasized that you were turning over "your own money" so that it then belonged to the company selling you the annuity.
It's possible I'm misremembering something.

I would be very grateful if someone could find it.

posted by FencingGal to Work & Money (4 answers total)

Maybe 'Annuities are not bought, they're sold'?

Or, and I realize it's a numbered list so maybe not, '5 reasons why you should never buy a variable annuity'?

Or, not on Forbes, 'Why annuities are (almost) always a bad idea'?
posted by box at 5:37 AM on April 27, 2022 [1 favorite]

I know this isn't directly answering the question, but I do want to point out that economists who study retirement and savings have been struggling for decades with the question of why economic theory says that many more people should be buying annuities than actually do.

This article is an excellent and I believe balanced review (even though it's on a proannuity site). The main point is that annuities are not good investments, because they are not supposed to be. Rather, they are life insurance - insurance against living longer than you expect and outliving your assets. (What we call life insurance is actually death insurance; insurance against dying sooner than you expect.)

What's absolutely true is that there are a lot of truly awful annuities being sold. If an annuity is right for you, unfortunately you're going to have to do a lot of work to make sure you don't get shafted. If you're lucky enough to not have to worry about outliving your assets, then do not buy an annuity.
posted by Mr.Know-it-some at 7:19 AM on April 27, 2022 [1 favorite]

Response by poster: Mr. Know-it-some, that link goes to a "page not found." It does sound like an interesting article, so I hope you'll try again.

Thanks for the answers so far. The specific article I'm looking for actually did the math for a proposed scenario and showed how long a person would have to live for the annuity to be a good idea, so it's not anything box linked to.

There's a good chance I won't outlive my assets because of cancer - so it took me a second to realize what you meant by "lucky."
posted by FencingGal at 7:28 AM on April 27, 2022 [1 favorite]

Mr Know it Some's link worked for me, and it's a good example why even a pro-annuity group can barely sell them and why they are generally a bad idea.


Costs and Risks

Premiums are higher because annuitants typically live longer.
Administrative and marketing fees accompany most annuity contracts.

Financial Realities

Retirees already have annuitized income through Social Security, Medicare and home ownership.
People want to leave inheritance to heirs.
Liquid assets are necessary for large, unexpected expenses, such as medical bills.

Irrational Resistance
Many people prefer to keep and control wealth.
posted by The_Vegetables at 9:25 AM on April 27, 2022