When you've maxed out other accounts
Another possible reason to use an annuities is if you have a high income, and you've maxed out contributions to your 401(k) and IRA, says Eric Tyson, author of "Investing for Dummies."
"Annuities have an extra layer of fees, and you don't get a tax deduction for your retirement savings contribution," he says. But it does let you save additional money for retirement and defer taxes on your investment returns until then.
And ideally, people should be at least 15 years from retirement or the date in retirement when they want to start collecting an income from their annuities. "You need that long for the compounding of the investment returns to make up for the fees from annuities," Tyson says.
There's another point to remember. Financial advisers and insurance people often sell annuities that pay them a commission. "That can greatly skew recommendations," he says.