Based on whether or not the annuity is fixed or variable, instant annuities can have numerous drawbacks ranging from loss of buying energy from inflation (having a fixed annuity), or higher charges (having a variable annuity).
For instance, a fixed annuity guarantees you a set payment to get a lengthy time period – possibly the rest of one's life. But you may reside longer than you believe. These payments you began obtaining whenever you initial retired will not alter at all, and they may appear fairly measly following 40 years of inflation.
A variable instant annuity may maintain your payments from becoming eroded by inflation – but then once more they may not. Payments bounce up or down every month based on the overall performance of one's underlying investments, which could make budgeting difficult. And payments can drop substantially more than the brief term when the markets fall.