Are Annuities Worth It? An Honest Answer for Retirees

“Are annuities worth it?” is the question every retiree eventually asks a search engine, and Dr. Martin Weiss’s “America’s Next Subprime Crisis” presentation has added a new twist to the answer. The pitch argues that the $3 trillion private credit market is the next subprime crisis and that annuity holders are exposed to it indirectly, because life insurers have moved increasing billions of their portfolios into private credit in recent years. The pitch even holds back an annuity alternative as one of its paid reports, teasing an income asset that is “not an annuity.”

So let us take the question honestly: what annuities do well, what they cost, and how the private credit debate changes the calculation.

What an Annuity Buys You

An annuity’s core value proposition is the only guarantee in personal finance that is hard to replicate: income that lasts as long as you do. No stock, bond, or withdrawal-rate strategy can promise that a 95-year-old will never outlast the money. A fixed annuity converts a lump sum into a guaranteed payment stream, and a fixed-index or variable annuity layers market participation on top of the insurance wrapper. The guarantee comes from the insurer’s reserves and its investment portfolio, not from any government agency (state guaranty associations provide a limited backstop of last resort). We break down that angle in our “What Is a Fixed Annuity? A Plain-English Guide” piece.

That is the honest case for annuities, and it is a real one. Longevity insurance has genuine actuarial value, especially for retirees without pensions.

What an Annuity Costs You

The honest case against runs on three axes. First, fees: annuity contracts often carry surrender charges for early withdrawals, mortality and expense charges on variable products, and rider costs that compound over decades. Second, opportunity cost: money inside an annuity generally does not grow the way a diversified portfolio can, which is the premium you pay for the guarantee. Third, liquidity: getting your money back early usually means paying for the privilege, which is the structural feature Weiss’s pitch dramatizes with a composite retiree, Frank, whose access freezes in the crisis scenario, “Your money is frozen.”

For the full mechanics, our guide to how annuities work and what they really cost covers the product structure in detail.

The New Variable: Private Credit

What the Weiss pitch adds to this old debate is the asset side of the insurer’s balance sheet. The argument: annuity guarantees depend on the insurer’s portfolio, insurers have been shifting billions into private credit (a documented industry trend), and the private credit market is showing genuine stress, with First Brands’ $11 billion-plus Chapter 11, Tricolor’s double-pledged collateral and SEC fraud charges, and redemption caps at BlackRock’s HPS fund and Blackstone’s BCRED all verified against the financial press. If the credit quality of what backs your guarantee deteriorates, the “safe” in “safe money” gets conditional.

Co-presenter Nilus Mattive adds the ratings dimension: insurers are graded by agencies paid by the insurers themselves, and his insider account of the model is pointed: “Before a company’s rating was downgraded, it got advanced notice from the rating agency and had the opportunity to appeal the downgrade.” The pitch’s answer is checking your specific provider against independent grades, which is where the firm’s X-Lists of “America’s weakest and strongest insurance companies, including many that issue annuities” come in.

The honest balance: the exposure argument is real and worth checking, while the systemic-crisis framing is Weiss’s forecast, hedged in his own words (“I have to believe we are in the early stages”). No insurer failure wave has occurred, and major life insurers remain regulated reserve-heavy institutions.

A Quick Framework for the Decision

A useful way to structure the choice is to separate the money you will need soon from the money you are insuring against old age. Near-term spending belongs in liquid assets: cash equivalents, short bonds, a taxable account you can reach without surrender charges. Longevity insurance, the genuine product annuities sell, only makes sense on the slice of money you are confident you will not touch for years, sized so that the surrender schedule never conflicts with your spending plan.

The second structuring question is who stands behind the guarantee, which is where the private credit debate enters. A strong insurer with conservative portfolio allocations is a different risk than a thinly reserved one reaching for yield. That is a checkable fact before you sign, not a mystery.

The Honest Answer

So, are annuities worth it? For a retiree whose top fear is outliving their money, a fixed annuity from a strong insurer remains a defensible purchase of lifetime income, ideally laddered and sized so liquidity needs are covered elsewhere. For someone who values flexibility, growth, and low fees, the costs usually outweigh the guarantee. The private credit debate does not change that framework; it adds a due-diligence step: verify the insurer’s financial strength from an independent source before signing a decades-long contract, and know your state guaranty limits. For more on that, see our “Are Annuities Safe? What the Private Credit Exposure Means” piece.

For the parallel hidden-risk argument in another asset class, see our coverage of subprime AI debt inside the AI bubble warnings, and for the protective playbook crisis pitches converge on, our guide to portfolio protection strategies for a shaky market.

The Weiss presentation leads to a $49 trial year of the Safe Money Report, which includes the annuity-issuer X-List and an income-asset alternative the pitch says has paid “every single year going back fifty six years,” with a 12-month refund window. You can review the presentation here.

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