The Ultimate Guide To AnnuitiesYour One-Stop Resource for Retirement
What are its disadvantages?
Despite its benefits, there are a few disadvantages to consider. The fixed annuities rates can be fixed for a determined period and then drop when this period ends. If you don’t like the new rates and decide to take your money out you probably will have to pay surrender charges that will impact your gains.
Other disadvantage is that if you decide to go with lifetime payments with a fixed amount, this amount will remain the same through the years while inflation will reduce the worth of your money. This could be a problem if you’re planning to retire early, because will imply that the purchasing power of your retirement money will be decreasing during those years.