What Are Disadvantages Of Annuities? 
That is a great question ! The biggest disadvantage to annuities is the lack of liquidity . For the first few years of the annuity , there are hefty surrender fees if something happens , and you need to pull some cash quickly . Most annuities will allow for a small fee free withdrawal , generally up to 10 % , but by taking even that cash , you greatly reduce the earnings potential of the annuity . Another disadvantage would arise if the rate of return on the annuity ended up being lower than what you might have received had the money been invested differently . If you 've got sufficient cash reserves and have done your homework before buying , neither of these should be an issue . Thanks for asking ! 