Suze Orman on Annuities: What She Gets Right and Wrong

For years, Suze Orman has told audiences on her podcast, on television and in her books that she is not a fan of annuities. Search "should I buy an annuity" and you will likely land on a clip of her telling a caller to stay away.

She is not wrong across the board. But listen closely to what she is actually describing, and it is almost always one specific product, not the whole category most retirees are shopping for today.

Below is a straightforward look at what she has actually said publicly, which parts of it check out, and the point at which it quietly stops applying the moment the conversation shifts from a variable annuity to a fixed index annuity or a MYGA.

What Suze Orman has actually said about annuities

Her most repeated position, stated across years of interviews, is that variable annuities are a bad fit for most people. She has been direct about it, framing herself as generally opposed to that product for the typical buyer.

Her platform is large, and a message repeated that often on television, in books and on a widely followed podcast tends to stick in people's minds long after the specific product she was describing gets forgotten. That is part of why so many people who have never read a single contract still say, almost reflexively, that they have heard annuities are a bad idea.

The specific objections she raises tend to fall into four buckets:

• High fees. Stack a variable annuity's mortality and expense charge, its administrative cost, its subaccount expenses and any optional riders together, and the combined bill can reach 3% to 4% annually. A $200,000 balance carrying that load loses $6,000 to $8,000 a year before any growth even registers.
• A wrapper around a wrapper. A traditional IRA or a 401(k) is already tax-deferred on its own, so wrapping a variable annuity around one of those accounts pays for a benefit the account already provides for free. In her telling, that combination ranks among the worse financial decisions a saver can make.
• A structure that favors whoever is selling it. When a financial product takes real effort to understand, she argues, the confusion usually works in favor of the person explaining it rather than the person paying for it.
• Timing. In her view, a saver who is still decades away from retirement has the runway to let the market outrun whatever safety a guaranteed contract could offer instead.

None of these four points is a fringe opinion. Plenty of advisors who bill a flat planning fee instead of a sales commission would sign off on the first two without hesitation.

Where the criticism holds up

Aimed squarely at variable annuities, her warning is largely accurate.

Add a full guaranteed lifetime withdrawal benefit rider to a variable annuity and the total yearly drag can land anywhere from 3.5% to 4.5%. Carrying that much weight, the underlying subaccounts have to post 7% to 8% before fees just to break even with what an ordinary low-fee stock fund nets on its own. Most years, they come up short.

Try a hypothetical comparison with different assumptions than any specific product's illustration. A 62-year-old moves $300,000 into a variable annuity that earns 6.5% before a 3.5% total annual charge is subtracted. Ten years later, that account has grown to something in the neighborhood of $403,000. Put that same $300,000 into a plain stock index fund earning 6.5% against a rock-bottom 0.04% expense ratio, and a decade later it would be sitting closer to $561,000, a difference of roughly $158,000 that the fee load alone accounts for. That gap does not even factor in years the subaccounts might have lost value outright.

The tax deferral complaint checks out too. If a traditional IRA contribution ends up wrapped inside a variable annuity, the only party who clearly benefits from that structure is whoever earned a commission on the sale. Layering deferral on top of deferral adds no additional tax advantage while adding real, ongoing cost.

Her complaint about complexity deserves real weight as well. Any product you cannot explain in your own words after reading through the paperwork twice is worth treating as a warning sign, regardless of who is selling it. A variable annuity earns that criticism honestly: between the subaccount menu, the benefit base math on a rider, and the surrender schedule sitting underneath all of it, a buyer can walk away from a sales meeting without a clear picture of what they actually agreed to.

Where the advice falls short

The trouble is scope. When she says she does not like annuities, she is describing one specific structure, the variable annuity, and applying that verdict to an entire category that actually contains several fundamentally different products.

A fixed index annuity and a multi-year guaranteed annuity share a legal wrapper with a variable annuity, an insurance contract, but almost nothing else. The mechanics, the risk profile and the cost structure diverge sharply once you look past the shared name.

Here is how her three main criticisms hold up against each structure:

On fees specifically, a fixed index annuity without a rider has no line-item annual charge at all. The carrier earns its margin by keeping a slice of the index's gain, the difference between what the index actually returned and the cap or participation rate written into the contract. That is an opportunity cost baked into the crediting formula, not a fee deducted from your balance. In a year the S&P 500 gains 18% against a 10% cap, the contract credits 10% and the carrier keeps the rest of that upside. In a year the index drops 20%, the contract credits zero and nothing is lost. Capped upside in exchange for a real floor is the entire trade being made, not a fee hidden in the fine print.

It helps to think of that arrangement less like a management fee and more like an insurance premium paid in growth rather than dollars. A homeowner buying flood coverage does not expect a refund in a dry year, and a buyer choosing a fixed index annuity is making a similar trade: giving up part of a strong year's gain in exchange for never having to absorb a bad one. Once framed that way, calling the capped upside a hidden cost stops making much sense, since nothing is actually being withdrawn from the account.

The buyer her advice was actually built for

To give her credit, the audience she built her reputation speaking to is not the audience that tends to benefit most from a fixed index annuity.

Through the 2000s and into the 2010s, her listeners skewed toward people still early in building their savings, with plenty of working years ahead and, all too often, a broker pushing a pricey variable contract into their IRA on commission. That crowd was, in nearly every case, better positioned in a plain index fund, and her advice fit them well.

Compare that to the profile of someone who actually gets value out of a fixed index annuity:

• Somewhere in the late fifties through their late sixties, closing in on retirement or already there
• Holding a sum in the low-to-mid six figures that a 30% market slide would genuinely hurt to lose
• Wanting more growth than a savings account or bond ladder without stepping into full stock market exposure
• Fine giving up some of the best years' gains in exchange for never having a losing one

For that person, a variable annuity is still generally a poor choice. A well-structured fixed index annuity from a highly rated carrier is a different conversation entirely, and it is one her sweeping criticism does not actually engage with.

That population is also not a small or shrinking one. A wave of Americans is reaching retirement age every year, and a growing share of them are arriving with the bulk of their savings in a 401(k) or IRA rather than a traditional pension, which means the job of manufacturing guaranteed income now falls on the individual rather than an employer. Blanket advice built for a wealth-building 35-year-old does not automatically transfer to a 63-year-old trying to solve that very different problem.

What she has said more recently

She has eased up on one thin corner of the category. In one appearance, she conceded that turning a lump sum into a guaranteed monthly check for life, the basic idea behind a single premium immediate annuity, can be a reasonable move for someone who worries about outliving their savings. Her framing likened it to a personal pension, noting that a retiree without a company pension who might live decades longer can find genuine reassurance in that kind of locked-in cash flow.

That is a meaningful shift, and it runs on a principle similar to how an income rider on a fixed index annuity works, converting savings that have already built up into income that lasts a lifetime.

What she has not addressed in any depth is the MYGA or a no-rider fixed index annuity as an alternative to bonds and CDs for a conservative retiree. That gap is where the category she is dismissing actually has the most to offer someone in that position.

It is worth noting how much that concession undercuts the broadest version of her message. If turning a lump sum into guaranteed lifetime income can make sense for the right retiree, the underlying logic behind an income rider on a fixed index annuity is not far off. Both structures pool longevity risk across a large group of buyers so that no individual has to guess correctly about their own lifespan, which is exactly the mechanism she is willing to praise in one product and has simply not weighed in on for the other.

Three questions worth asking before following any annuity advice

Whether the advice comes from a television personality, a relative, or us, run it through these three questions first.

Exactly which annuity structure is under discussion? The word covers a whole family of products, not one item. A deferred contract, an immediate one, a variable one, a fixed one and an indexed one each work differently enough that a true statement about one can be dead wrong about the next.

What does that fee actually cost in real dollars? Push past a percentage and ask someone to translate it into an annual dollar figure for your specific balance. An inability to answer that plainly is itself a red flag. Riders on an FIA typically run 0.5% to 1.2% a year, worth knowing before you sign, while a MYGA and a bare-bones FIA charge nothing at all.

Compared with what, exactly, for this particular pool of money? Comparing an FIA against "the stock market" broadly misses the point. The honest comparison is against a short-term CD, a conservative bond fund and a MYGA, the actual alternatives for money that has to stay safe. Measured against that set, fixed index annuities and MYGAs often win once taxes and risk both get factored in.

According to LIMRA, annuity sales have set records in recent years as more retirees look for guaranteed alternatives to bonds and CDs in a volatile rate environment, which suggests a lot of people are running exactly this kind of comparison on their own money rather than dismissing the category outright.

That trend does not mean every one of those buyers made the right call, and plenty of them almost certainly signed up for a product they never fully understood, which is exactly the outcome a blanket warning is meant to prevent. It does mean the more useful habit is running your own numbers rather than outsourcing the decision entirely to a slogan, whether that slogan says buy or avoid.

Her caution genuinely earns its place when the subject is a variable annuity. Plenty of Americans have been handed one loaded with fees they never fully understood, and that pattern deserves the pushback it gets.

Stretch that same caution over a fixed index annuity or a MYGA, though, and it stops matching reality. Both products answer her three biggest objections, cost, market exposure and complexity, in ways a variable annuity is not built to do. The name they share is close to the only thing they have in common. If you want to see how a fixed index annuity or a MYGA stacks up against other top-rated carriers for your own numbers, a free, no-obligation quote is the fastest way to find out.