When it comes to annuities, many consumers today still hold on to objections and misconceptions that have been around for decades—some of them even as old as the 1980s and 1990s.

These objections, that we often refer to as "antique annuity objections," have become so ingrained in the public consciousness that they continue to shape attitudes toward annuities, even though they are largely no longer valid in the context of modern financial products. In fact, these objections now fall so far behind the incredibly positive evolution of modern annuity product design and usage, that they truly now days are more akin to “urban legends” than reality.

The good news is that, when armed with the right education and knowledge about today’s annuities, these outdated objections can be easily dispelled.
 

Let’s explore some of the most common “antique” annuity objections and explain why they no longer hold any weight in today’s market.

 

1. "Annuities Have High Fees"
 

This objection is one of the most enduring myths about annuities. In the past, many annuities, particularly variable annuities, came with hefty fees that could erode the overall return on your investment. However, this is not the case with modern annuities - especially the lifetime income annuities we prefer.
 

Why it’s an antique objection:

There are a wide variety of annuity products available today, and many of them come with very low or even zero fees. Fixed annuities, for example, generally have no ongoing fees beyond the cost of the contract itself. Some fixed indexed annuities also feature low fees, and even when there are fees, they are often transparent and predictable.  Other products, such as lifetime income annuities or deferred income annuities - which are excellent funding vehicles for annuity laddering strategies - do have some modest fees, but these fees have no bearing or negative impact whatsoever on the high level of contractually guaranteed income the consumer will be receiving. 
 

How to respond:

If someone expresses concern about high fees with annuities, the simple reply might be, "Why would you voluntarily purchase an annuity with high fees when so many modern options come with little to no fees at all?" The annuity landscape has changed dramatically, and there are now plenty of choices that don't come with the burdensome costs that were once common.  So is that even still an objection? 


 

2. "If I Die Early, the Insurance Company Keeps Everything"
 

Another classic objection is the fear that if you pass away shortly after purchasing an annuity, your beneficiaries won’t receive anything, and the insurance company will keep your investment. While this was sometimes the case with older, more rigid annuity products, today's annuities often include built-in options that protect your beneficiaries.
 

Why it’s an antique objection:

Most modern annuities offer death benefits to your heirs. These benefits can range from a refund of the premiums you paid (or the account value) to a guaranteed payout for a surviving spouse. Some products even allow for multiple payout options that ensure your loved ones are financially protected.
 

How to respond:

When someone brings up the fear of the insurance company "keeping everything," a simple reply might be, "Why would you buy an annuity like that when almost all modern annuities come with full survivor benefits for both spouses and heirs?" Modern annuities are designed to give you peace of mind, knowing that both you and your spouse should never have to fear running out of income during either of your lifetimes, and knowing that your family will be cared for after you're gone.

 

3. "Annuities Are Too Complex to Understand"
 

In the past, annuity products could be incredibly complex, with opaque language, hidden clauses, and confusing terms. While annuities are inherently more complex than some other financial products, advancements in product design and transparency have made them far easier to understand today.
 

Why it’s an antique objection:

Today’s annuity contracts are much more transparent than those of previous decades. Insurance companies are now required to provide clearer information about the fees, terms, and conditions of their products. Additionally, financial professionals who specialize in annuities are well-versed in explaining how these products work in straightforward language, ensuring that consumers can make informed decisions.
 

How to respond:

If someone feels overwhelmed by the complexity of annuities, we can gently guide them educationally into understanding the tremdous benefits that annuities can provide when used at their most simple and basic form : providing a lifetime stream of guaanteed income that can never be lost or outlived. There’s no need to fear complexity when help is available, and our entire existence as an entity is to help simplify, clarify, and empower consumers with the type of educational content that would enable them to make informed and confident decisions for retirement. 

 

4. "Annuities Don’t Keep Up With Inflation"
 

A common objection in years past was that annuities didn’t provide inflation protection, meaning that the purchasing power of your income would decrease over time. While this could be true for fixed annuities without inflation riders, modern annuities offer a range of options that allow you to hedge against inflation.  Additionally, more advanced planning strategies, such as the annuity income laddering strategies what we advocate, design, and implement for our clients, include built in inflation-adjustments so every several years, a person received automatic and schedule raises to their lifetime income.  
 

Why it’s an antique objection:

The perception of many consumers today is that income from annuities is level and will never increase.  And while this can be true to a certain extent, where many people misunderstand, is that a level income payout is just one of several options/methods that can be selected.  Many annuities now days come with built-in inflation protection features. For example, some fixed indexed annuities offer increasing payouts each year to help protect against inflation. There are also annuities with cost-of-living adjustments (COLAs) that automatically increase your payments over time. These options can be especially valuable in a rising inflation environment. 

Or what we find to be even more effective are some slightly more advanced planning strategies, such as the annuity income laddering strategies that we advocate, design, and implement for our clients, which include built in inflation-adjustments so every several years, a person receives automatic and scheduled raises to their lifetime income.  

How to respond:

If someone is concerned about inflation, our typical reply is, "If we could show you a visual example of how to redesign your portfolio mathematically with annuities to help you stop losing money, never run out of income, receive automatically increasing income for life (regardless of whether the stock market cooperates the way you're hoping it will or not along the way), preserve your principal, and still include a significant amount of liquidity and flexibility along the way - does that sound like something you'd be interested in knowing more about from an educational standpoint?"  

If you would also answer "yes" to that questions as well, then book a free visual demo strategy session below. 

 

5. "I Can’t Access My Money if I Buy an Annuity"
 

One of the oldest objections to annuities is the belief that once you purchase an annuity, your money is locked away and inaccessible. While some older annuities did have rigid withdrawal restrictions, today’s annuities offer much more flexibility.
 

Why it’s an antique objection:

Many modern annuities, especially fixed indexed annuities, allow for partial withdrawals without penalty, and some even have provisions that allow you to access a portion of your money if you face an emergency. Furthermore, annuities with riders, such as a liquidity rider, allow for access to your funds under specific conditions, ensuring you’re not entirely restricted if you need access to cash.  Lastly, annuities should not represent anywhere near your total portfolio balance to being with - meaning, every retiree should still have plenty of liquid cash and assets on hand for emergencies outside of any annuity option they may be considering for a portion of their plan. 
 

How to respond:

If somone is concerned about liquidity, we simply explain the following philosophy:

When annuities are used correctly within a greater overall strategy, they should only represent a percentage of someone's total overall nest egg.  

For Example: say the annuity ladder, producing all the income someone needs, would house 50% of their portfolio balance while in return, solving 100% of their lifetime income need at the same time.  This means there is another 50% of their portfolio "still out there" liquid that can be used and access for growth, liquidity, emergencies, etc.  
 

How many retirees realistically have such catastrophic emergencies that they need to "cash out " more than half their life savings all all at once, and if they did, would they really even care at that point about a relatively modest, single-digit surrender charge percentage from an annuity in order to cash out and get their entire remaining balance back within 3-5 business days?

Even if someone did have to cash out an annuity, and triggered let's say a 6-7% surrender penalty, isn't getting 93% of your balance back within 3-5 business days of processing time a much more mild worst case scenario than having to cash out a market-based portfolio at the bottom of an economic downturn due to an emergency?  

Remember the sharp 30% downturn in the market right after COVID first hit?  There were millions of people across the country who were forced out of work, stopped receiving their paychecks and had no choice but to cash out their 401k plans at the bottom of a -30% downturn.  That would be the equivalent of an annuity having a 30% surrender charge, which is unheard of.  Most annuity surrender charges start out around 9-10% (or less) and systematically diminish over the course of a 5-10 year contract until they expire completely.  

Again, how much more mild of a worst cast scenario would it be having to cash out of an annuity with a modest surrender charge in contrast to doing it at the bottom of a severe market downturn.   So it's just not something that needs to be feared - especially when proper planning steps are taken to ensure there is plenty of liquid money left outside the annuity to begin with. 
 

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The Real Issue: Lack of Education
 

When you look closely at the reasons behind most annuity objections, it becomes clear that the core problem is not the product itself but a lack of education and understanding. A lot of people have inherited outdated views from past generations or from experiences with older products that were not as consumer-friendly as today’s offerings.

The truth is, annuities have evolved, significantly, and with proper education, most common objections simply melt away.

Today’s annuities are designed to be more transparent, flexible, and beneficial for a broader range of financial situations.

And with the application of more advanced planning strategies (such as annuity income laddering) even the small remaining "cons" regarding annuities can be easily neutralized while at the same time their "pros" are magnified even greater. 

 

Conclusion
 

In the end, what we often refer to as "antique annuity objections" are simply relics of the past, carried over into the present day without any basis in current reality. These objections were formed in an era when annuities were more complex, less transparent, and less consumer-friendly. But today’s annuities are designed with modern consumers in mind—offering flexibility, low fees, survivor benefits, inflation protection, and much more.
 

So, the next time you hear an objection about annuities, it’s important to remember that in many cases, the real issue is a lack of education. By addressing these outdated concerns with the knowledge of modern annuities, you can help people make informed, empowered decisions about their financial futures. And ultimately, with the right product and a well-structured plan, annuities can be an invaluable tool in building a secure and predictable retirement income.