I know what you're thinking: "Why would someone who helps people with annuities tell me when NOT to get one?"
Because honesty builds trust. And trust is the only thing that matters in this business.
Here's the truth: annuities are not for everyone. And I'd rather tell you that now than have you make a decision that doesn't fit your situation.
You probably should NOT buy an annuity if:
1. You need all your money liquid right now. If you're going through a major life transition — a divorce, a health crisis, a career change — and you may need access to every dollar on short notice, locking up a portion of your money doesn't make sense. Even with free withdrawal provisions, an annuity requires a longer-term commitment to work as intended.
2. Your time horizon is very short. If you're looking for a place to park money for 2-3 years, an annuity is probably not the right tool. Most products need at least 5-7 years to deliver their intended value. A shorter-term option like a CD or money market may be more appropriate.
3. You're working with a very small amount. If you have $20,000 in total retirement funds, an annuity may not move the needle enough to justify the commitment. There are minimum thresholds where the income benefits become meaningful, and below those thresholds, simpler strategies may serve you better.
4. You're already over-allocated to annuities. I've seen people who already have 80% of their money in annuity products and someone is trying to sell them another one. That's not planning — that's product pushing. Diversification matters, even within insurance products.
5. You don't understand what you're buying. This is the biggest one. If someone is pressuring you to sign something you don't fully understand, walk away. A good advisor will explain everything in plain language, answer every question, and give you time to think. If that's not happening, the product isn't the problem — the process is.
Why I'm telling you this
Because the people who hear me say "this might not be right for you" are the same people who trust me when I say "this could really help your situation." I'd rather lose a sale than gain a client who shouldn't have bought.
There's a process I use to determine when an annuity is and isn't a fit. It starts with understanding your full financial picture — income, expenses, timeline, goals, risk comfort — before ever looking at a single product.
Get the book free
Indexed Annuity Secrets walks through all of this in plain English — the 0% floor, surrender periods, the questions to ask before you sign anything.
Get your free copyBook a 15-minute call
Author of Indexed Annuity Secrets and founder of Pacific Ridgeway Insurance Solutions in San Diego. Navy veteran. Licensed financial professional, CA #4132743.
Fixed indexed annuities are insurance products, not investments. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. This article is for educational purposes only and is not financial, investment, tax, or insurance advice.