Experts Back Annuities Despite 3.8% Inflation, Warn Against Locking Up Over 50%

3 articles · Updated · CBS New York · May 21

3.8% inflation and still-high rates are pushing Americans to reassess retirement investments, with advisers saying annuities can still fit portfolios despite the tougher backdrop.
Higher rates have lifted fixed-annuity payouts to levels that can match or beat CDs, while guaranteed monthly income and tax deferral appeal to retirees seeking shelter from volatile markets.
22% to 50% increases in long-term care costs since 2019 also strengthen the case for annuities that include nursing-home or care riders, especially for clients who cannot get traditional coverage.
Liquidity remains the main drawback: surrender periods can lock up money and trigger steep penalties, while fixed payouts can lose purchasing power if inflation stays elevated and rates rise further.
Experts say annuities work best for a specific income need, generally should not exceed 50% of investable assets, and are often a poor fit for people under 50 or investors seeking growth.

In an era of high inflation, can a fixed annuity income truly provide long-term financial security?

Are annuities a safe haven for retirement, or a costly trap of high fees and low growth?

As new rules push annuities into 401(k)s, will this solve the retirement crisis or create new risks?