Are Annuities Bad During Inflation?

Shawn Plummer

CEO, The Annuity Expert

Understanding the Impact of Inflation on Annuities

Inflation and Annuities: A General Overview

  • Inflation can significantly impact the value of annuity payments.
  • Annuities, especially fixed ones, may not keep pace with rising costs.

MYGA Annuities and Inflation

  • Multi-Year Guaranteed Annuities (MYGAs) offer fixed interest rates.
  • Low interest rates in MYGAs can be a disadvantage during inflationary periods.
  • They may fail to provide competitive returns compared to rising market rates.

How Inflation Affects Lifelong Income from Annuities

Reduced Purchasing Power

  • Annuity payments may remain constant while living costs increase.
  • This erodes the real value or purchasing power of retirement income.

Annuity Options and Adjustments

  • Consider annuities with inflation-protection features.
  • Some annuities offer cost-of-living adjustments to counter inflation.

Solutions: Adapting Annuity Plans to Combat Inflation

Replacing Low-Performing Annuities

  • Replacing MYGAs with low interest rates can be beneficial.
  • Look for annuities with better benefits and inflation-adjustment clauses.

Financial Planning Considerations

  • Consult with a financial advisor for personalized advice.
  • Review the annuity contract and consider the cost of replacement.


Annuities can be less effective during inflation, especially MYGAs with low interest rates. Lifelong income from annuities may also lose purchasing power. Replacing these with better-suited annuities could be a solution. It’s important to evaluate your options carefully and seek professional advice.

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Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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