I have had some posts recently that discussed the advantages of annuities. In the interest of being balanced I will share some of the disadvantages in this post.
1.High Management Fees – This depends on the annuity but in general annuities have high fees.
2. Surrender or Withdrawal Fees – These fees can be avoided but if you find yourself in an unforeseen situation you might face these stiff fees.
3.IRS Penalty for Early Withdrawal – Withdrawals before the age of 59.5 are charged a 10% tax penalty by the IRS unless you meet certain exceptions.
4. Low Liquidity – You are limited on how much you can withdraw from an annuity.
Those are some of the disadvantages of annuities. If you want to mention any other disadvantages or advantages of annuities please feel free to share them in the comments.