When planning for retirement, many people turn to annuities for the promise of steady income and financial security. However, what most don’t realize is that hidden fees within these products can quietly erode the retirement savings they’ve worked so hard to build.

In this episode of Leibel On Fire, financial expert Leibel Sternbach shines a light on the often-overlooked costs embedded in annuity contracts and offers practical advice on how to protect yourself before—and even after—you buy one.

The Hidden Fees Lurking in Annuities

Annuities can come with a variety of hidden costs, including mortality and expense charges, surrender penalties, and costly riders. These fees vary depending on the type of annuity, and unfortunately, they are often difficult to fully understand because the contracts themselves allow for changes over time.

Leibel explains that it's nearly impossible to know all potential future costs upfront because insurance companies can adjust fees at specific intervals. That uncertainty puts retirees at risk of paying far more than they anticipated.

Key Questions to Ask Before Buying

To protect yourself, Leibel recommends asking your insurance agent for a “worst-case scenario” illustration. This means you should find out exactly what your benefits would look like if you earned zero on the policy—essentially, what you’re getting for your money when things don't go as planned.

It’s crucial to make sure that even in the worst case, the annuity still meets your needs. Sometimes the protection an annuity offers is worth the cost. Other times, it may be better to explore other options or even self-insure.

Another important question to ask: What happens to the annuity if you pass away? Some contracts allow a spouse to continue the policy seamlessly, while others may only pay out a reduced benefit or force the survivor to start a new contract. Understanding these details in advance is key to protecting your loved ones.

If You Already Own an Annuity: What Are Your Options?

If you already own an annuity and feel dissatisfied with its performance or the fees you’re being charged, you’re not stuck. Leibel advises that you can shop around for low-cost, fee-based annuities that strip out unnecessary insurance components while still offering tax advantages.

In some cases, you may be able to switch to a new annuity with better terms, even after factoring in surrender charges. The goal is to minimize ongoing fees while preserving the benefits you care about, such as lifetime income, long-term care options, or a death benefit for your heirs.

The important thing is not to assume you're trapped. Insurance companies frequently introduce new products, especially during times of market volatility, and these newer options might offer better value for your needs.

Get Unbiased Help Before You Decide

Understanding the true cost of an annuity isn’t easy. That’s why Leibel and his team at Yields4u.com offer unbiased advice to help retirees evaluate their current annuities and explore better alternatives when appropriate.

If you have questions about your annuity or if you’re wondering whether it’s the right fit for your retirement plan, schedule a free retirement tax analysis today. The team at Yields4u doesn’t sell insurance products, so you can trust that the guidance you receive is focused solely on your best interests.

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Don’t let hidden fees derail your retirement. Get informed, ask the right questions, and take control of your financial future.