Like most Crypto Currencies…. many annuities are scams. Actually that is not correct. A better way of stating this is that many people are scammed into the WRONG type of annuity.
On numerous occasions I've actually wanted to punch another advisor for putting clients or future prospects into piss poor annuities that did not serve my clients interest at all.
However when the right person and product are aligned annuities CAN be a wonderful thing. There are some annuities that do wonders for people in high tax brackets, who've already maxed out other contributions and need a tax efficient way to save. This also works extremely well for Irrevocable Trusts.
Other types of annuities are good for people looking to protect their legacies from sequence of return risk whereas their heirs can receive stepped up death benefits.
In the simplest sense… certain types of annuities are great for income planning. It is important this strategy is also married with a strategy to hedge against inflation and that you are working with a professional that knows what they are doing and have your best interest at heart. I'd also recommend you talk with someone that isn't tied down to one particular company and someone that is extremely knowledgeable about how ALL types of annuities work and how it is to be a corner stone of many rock solid financial plans.
Most financial advisors want to sell you on annuities that lock you in for decades or annuities that pay them incredibly fat upfront commissions. Most will never tell you about annuities that offer the highest immediate income because they typically pay the smallest commissions.
To learn why annuities make sense I'd highly recommend you watch the following animation I had made that shows the mathematical proof for why these can make sense.
Do your homework and don't trust the first salesperson you see…. unless of course we're the first people you've come across 😉