Yesterday, we looked at the health insurance gap early retirees face—and the pricey surprises that can follow. Today we’re shifting to one of the biggest debates in retirement planning: should you buy an annuity to lock in income for life?

On paper, annuities sound like a dream. You hand over a chunk of money, and in return, the insurance company sends you a check every month until you die. No market swings, no guessing how much to withdraw. Just steady, predictable income.

But the fine print? That’s where things get dicey.

Let’s start with the good. A fixed immediate annuity can provide guaranteed income that never runs out. For conservative retirees who fear outliving their money, that’s peace of mind. You don’t have to worry about stocks crashing or making your nest egg last 30 years.

Some annuities even offer cost-of-living adjustments or survivor benefits. And since income is guaranteed by an insurer, it doesn’t fluctuate like market-based accounts.

But here’s the catch: most annuities are sold, not bought. That means aggressive sales tactics, confusing contracts, and high commissions. Once you buy, that money is often locked up—sometimes permanently.

And if inflation spikes? You could be stuck with a payment that loses purchasing power year after year.

Then there are variable annuities, which mix insurance with investments. These promise growth potential, but come loaded with fees that can exceed 3% a year. Add surrender charges, riders, and restrictions—and you’re looking at a product that can quietly drain your savings while promising to protect them.

So why are they pushed so hard?

Because they’re profitable—for the people selling them. Many advisors earn big commissions from annuities. And that’s why some retirees end up in products they don’t need or fully understand.

But that doesn’t mean all annuities are bad. For the right person, in the right situation, a simple annuity can act like a personal pension—something fewer and fewer Americans have.

The key is knowing what kind you’re buying. Are you getting guaranteed income with no strings? Or are you locking your money into a complex structure that favors the insurer?

The elites? They don’t buy annuities—they build them. Their portfolios are so diverse and robust, they can self-fund predictable income without paying high fees or losing flexibility.

But if you’re looking to cover essential expenses like housing, food, and health care, and you’re afraid of outliving your money, an annuity might be worth considering—as long as you understand the tradeoffs.

Tomorrow, we’ll explore something else the elites never overlook: how to protect your retirement from long-term care costs—and why most Americans get this planning step totally wrong.