What’s your first reaction when you hear the word “annuity”? If you’re like many people approaching retirement, you might immediately think “expensive,” “inflexible,” or “too good to be true.”

We understand those concerns. At Intelliplan Financial, we’ve worked with countless clients who initially dismissed annuities based on outdated information or incomplete advice from other sources. But here’s what we’ve learned: the problem usually isn’t annuities themselves, it’s how they’re being presented and implemented.

The truth is fixed index annuities (FIAs) can be powerful tools for creating guaranteed cash flow when used strategically. But only if you avoid these five critical mistakes that could hurt your financial security in your golden years.

Mistake #1: Dismissing Annuities Based on Misinformation or Headlines

If you’ve ever Googled “are annuities bad?” you’ve probably seen headlines that paint them in a negative light. This might be the costliest mistake of all—forming your opinion about annuities from sensationalized headlines or outdated information.

The financial media often focuses on worst-case scenarios or compares all annuities as if they’re identical products. You might have heard “annuities are expensive” or “annuities tie up your money forever” without understanding that these statements don’t apply to all types of annuities or every person’s situation.

Fixed index annuities offer features like principal protection, tax-deferred growth, and lifetime income guarantees. These benefits are often not fully understood or considered by many people.

So, if a qualified financial advisor recommends an annuity, don’t immediately write it off as a blanket suggestion. It’s often a strategic decision based on your specific retirement goals and risk tolerance that may be worth considering.

Mistake #2: Focusing Only on Growth, Not Income Planning

Many investors are laser-focused on market returns, and during your working years, this focus makes sense. But as you approach retirement the question shifts from “How much can I accumulate?” to “How can I turn this into reliable cash flow that lasts my entire lifetime?”

Imagine you’ve successfully accumulated $500,000 in your investment portfolio. That sounds substantial, but what happens when you need to start withdrawing money for living expenses during a market downturn? Those withdrawals could permanently damage your long-term financial security.

This is where fixed index annuities excel. Instead of trying to beat the market, you’re creating a reliable income stream that can last your entire lifetime—even if you live well into your 90s. They allow you to benefit from market upsides (to a cap) while protecting your principal from market downturns, ensuring your retirement payments remain steady regardless of market volatility.

Mistake #3: Assuming Liquidity Is Always More Important Than Security

“But what if I need my money?” This is one of the common objections we hear about annuities, and it reveals a fundamental misunderstanding about retirement planning priorities.

Here’s what people may not consider: not every dollar in your portfolio needs to be 100% liquid. Smart retirement planning is about strategic allocation—think about it, if you have a 401(k), how much of that money is liquid? Not 100%.

The key is building a retirement plan with both liquid assets for short-term needs and secure assets for long-term stability. This includes emergency funds in easily accessible accounts, growth investments for long-term potential, and a portion in guaranteed income vehicles like annuities for baseline security. Many fixed index annuities even allow penalty-free withdrawals up to 10% per year, and once income riders are activated, you’ll receive steady payments regardless of market conditions.

An annuity serves as a dependable foundation—protecting your savings from market volatility and helping you sleep better knowing your income is covered.

Mistake #4: Letting Fees Overshadow the Value

One of the first questions people ask is: “What are the fees?” That’s a fair question — but it’s only part of the story.  Evaluating an annuity based only on fees is like rejecting health insurance because it has a monthly premium.

With fixed index annuities, many contracts come with no upfront fees. Optional riders, such as income guarantees or enhanced death benefits, may carry a cost — but they also deliver tangible value and peace of mind.

It’s important to weigh costs against the protection and benefits you receive.

Consider this: when you purchase a fixed index annuity, you’re purchasing insurance against outliving your money, protection from market downturns, guaranteed income for life, and professional management of complex financial instruments.

Mistake #5: Thinking of Annuities as an “All or Nothing” Decision

Many people assume that purchasing an annuity means committing all of their retirement savings — but this is rarely the case.

Annuities are typically just one part of a diversified retirement plan. You might use a portion of your savings to secure income with an annuity, while keeping the rest invested in other vehicles for growth and flexibility.

The goal for any retirement plan should be to create balance, confidence, and security. The right allocation depends on your specific situation:

• Higher annuity allocation might make sense if you’re concerned about market volatility or don’t have a pension
• Lower annuity allocation might work if you have other guaranteed income sources or a higher risk tolerance

This is exactly the philosophy behind our Bucket Plan approach. We strategically allocate your assets across different time horizons: “now,” “soon,” and “later.” Annuities typically play a crucial role in the “soon” bucket, providing guaranteed income for your future years while allowing other investments in the “now” and “later” buckets to focus on liquidity and growth.

This framework helps ensure you have the right balance of accessibility, growth potential, and security throughout your retirement journey, rather than forcing you into an all-or-nothing decision about any single financial product.

Don’t Navigate Annuity Decisions Alone

The biggest mistake of all? Making annuity decisions without understanding how they fit into your complete financial picture.

These strategies work best when they’re part of a comprehensive financial plan that considers your unique situation, goals, and timeline. That’s where our holistic financial planning philosophy makes all the difference.

As fiduciary advisors serving Gahanna, Westerville, New Albany, and the greater Columbus area, we take time to understand your complete financial situation before recommending any specific product or strategy.

Ready to explore if annuities make sense for your retirement goals?

Don’t wait until it’s too late to optimize your plan. Schedule a complimentary consultation with our team at Intelliplan Financial. We’ll review your specific situation and help you understand all your options—including whether annuities are right for you. 

Disclosure: Financial Planning and Advisory Services are offered through Prosperity Capital Advisors (“PCA”), an SEC-registered investment adviser. Registration as an investment adviser does not imply a certain level of skill or training. Intelliplan Financial and PCA are separate, non-affiliated entities. PCA does not provide tax or legal advice.