As I’ve said before, you just can't say annuity because there's many annuity types, so it really comes down to the type of annuity that you either own or you're considering owning.
The biggest thing with annuities is the fact that annuities are contracts, they're not investments with contractual guarantees. You're transferring the risk to the annuity company to typically provide principal protection or lifetime income or legacy or long-term care/confinement care type stuff. Annuities were put on the planet for lifetime income but in my opinion when you lock in lifetime income, you might miss out on some opportunities.
Can you lose money in your annuity? It comes down to the different annuity types. Single premium, immediate annuities, deferred income annuities, and qualified longevity annuity contracts. Those are lifetime income products, so you can structure them so that you're never going to lose a penny and the annuity company's on the hook to pay, regardless of how long you live.
Multi-year guarantee annuities and indexed annuities are fixed annuities and are CD type annuities. If you hold your policy to the duration, you're not going to lose any money. I don't sell variable annuities because you can lose money. This is because inside that variable annuity, the investments are called separate accounts, also called mutual funds. Therefore, those can go up and down, so you can lose money with that type of product. Obviously, if you cash out early and pivot with a multi-year guaranteed annuity, a fixed index annuity, or a variable annuity before those surrender charges have finished, then yes, technically you lose money.
Annuities should be the foundation for the income floor or the principal protection that you need as part of your overall portfolio. It doesn't mean you have to own one, but those are the places that they fit. In my opinion, the biggest issue with annuities are people who are buying what they don't understand.
As I always tell people, if you can't explain it to a nine-year-old, don't buy it. Take your time. Do your due diligence. As I always tell people with annuities, there's never an urgency to buy an annuity.
This leads me to my next point. If you want to understand what's “in the weeds”, talk to me. If you haven't caught it by now, I'm brutally factual. I'm the walking middle finger of annuity truth and proud of it. I'll give you all the information you need. Do not trust the sales pitch. Trust the contractual realities. That's pretty much it.
Never forget to live in the reality, not the dream with annuities and contractual guarantees! You can use our calculators, get all six of my books for free, and most importantly book a call with me so we can discuss what works best for your specific situation.