Annuities can serve some very specific needs but they’re not for everyone.
They often come with steep commissions — up to 9 percent of the investment amount. But you also can find no-load versions that don’t, says Jill Gianola, CFP, owner of Gianola Financial Planning LLC.
Annuities express their rate of return through their payout rather than an annual interest rate, says David John, senior strategic policy adviser with AARP’s Public Policy Institute. That can make it difficult to track how well the investment performs and what the associated fees are.
Bankrate asked a handful of financial advisers, annuity experts and financial planners when it is smart to use annuities. Most employ them rarely or only in certain select situations.
Even trained money managers disagree about when annuities are the best way to go. That means it’s smart to talk with several experts, weigh their biases and look at what’s best for you.
Here are six situations where some advisers would consider using annuities.