The problem with annuities


Q: In a recent response, you recommended a reader not take out an annuity using Thrift Savings Plan funds. Do you consider these annuities unsafe? I am thinking of taking an annuity when I retire to guarantee an income (along with my regular annuity and Social Security). I’m not sure that I would get enough through taking a set amount each month, or that it would last for the rest of my life. What do you see as the problems with the MetLife annuity? Are there fees for administering the account?

A: Because it is an irreversible action, I generally recommend that you purchase an annuity only when it is clearly your best option. MetLife is a large and reputable company. My concern is that you might be locking in an income stream that will not keep pace with inflation and which provides no flexibility to accommodate changes in your needs. These are the risks you accept in exchange for the annuity’s guarantee.


About Author

Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to and view his blog at

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