Suze Orman on Annuities: The Real Pros Cons and Middle Ground
Suze Orman on Annuities: The Real Pros, Cons, and Middle Ground
No sales pitch—just clarity. If an annuity doesn’t help your plan, we’ll say so in writing. If it can lower risk or taxes, we’ll show the math.
What You’ll Get Here
- Plain-English pros & cons (no jargon).
- When to skip annuities—and what to use instead.
- Quick math comparing taxable vs. tax-deferred growth.
Why People Trust Us
- Fiduciary advice: plan first, product second.
- A-rated carriers and transparent fees.
- Written recommendations—no pressure.
What Suze Gets Right—And Where Real Life Differs
Suze Orman is right to warn about some annuities: high fees, surrender charges, and confusing bells & whistles.
But she’s often speaking to a national audience with broad strokes. In real-life plans, certain annuities can:
reduce sequence-of-returns risk, create reliable income you can’t outlive, or shelter growth from annual taxes—when used correctly.
When an Annuity May Help
- Income you can’t outlive: Cover the “must-pay” bills so your market assets can ride out volatility.
- Tax deferral on non-retirement money: Avoid annual tax drag, then time withdrawals smartly.
- Principal protection: Fixed/MYGA structures for CD-style savers seeking better terms.
When to Skip It
- You already have guaranteed income (pension + Social Security) covering your needs with margin.
- Time horizon is very short and liquidity is critical.
- You need equity-like returns and accept volatility to pursue them.
Five Honest Answers (No Hype)
“Aren’t annuity fees always too high?”
Some are, some aren’t. Low-cost fixed and MYGA options exist. We show total cost vs. benefit and compare to CDs/bonds so you can see apples-to-apples.
“Is my money locked up for life?”
Most fixed annuities have free annual withdrawals (often 10%) and defined surrender schedules. We build liquidity ladders so you keep access.
“What about inflation?”
Add COLA/increasing-income features or pair annuities with growth assets. The plan—not the product—handles inflation.
“I don’t want a sales pitch.”
We’re fiduciaries. You get a written plan first. If an annuity doesn’t help, we recommend alternatives and stop there.
“When does an annuity actually make sense?”
When guaranteed income reduces sequence risk, when tax deferral beats taxable interest, or when you need longevity insurance. Otherwise—skip it.
Quick Math: Why Tax Deferral Can Add Real Dollars
Illustration (not advice): $100,000 at 5% for 10 years.
- Taxable @ 24% bracket: you pay taxes on interest annually—compounding takes a haircut every year.
- Tax-deferred (non-qualified annuity): no annual tax drag; taxes apply when you withdraw, so more stays invested longer.
Your bracket, product structure, RMDs, and withdrawal timing matter. We’ll run your personalized numbers side by side.
Case A: “I hate volatility.”
Couple (68/66) covered essentials with Social Security + small pension. Used a fixed annuity ladder for the next 10 years of “sleep-at-night” income; kept equities for long-term growth.
Case B: “Too much in taxable.”
Widow (72) had CDs and bond funds. Shifted a portion to a MYGA to reduce tax drag; set staged withdrawals to coordinate with RMDs and charitable goals.
Examples are educational, not guarantees. We’ll model your specifics before any recommendation.
Free 3-Minute Clarity Call
We’ll tell you if an annuity is a bad idea—for free. If it helps, you’ll see exactly how and why.
FAQs
Are all annuities high-fee?
No. Variable annuities can be pricey; fixed annuities and MYGAs can be very lean. We disclose all costs before you decide.
What about surrender charges?
They exist, like CDs. We structure liquidity (cash bucket + free withdrawals + laddering) so you’re never trapped.
Will I lose access to my money?
You’ll keep access via free-withdrawal features and planned ladders. If you need full liquidity, we’ll recommend non-annuity options.
How do taxes work?
Non-qualified annuities defer taxes until withdrawal; qualified annuities follow IRA/401(k) rules. We coordinate with your CPA when needed.
Disclosures: Not investment, tax, or legal advice. Product availability, features, and guarantees depend on insurers and state rules. Read contracts before purchasing.