Suze Orman vs Annuities and Taxes What Her “No No No” Misses

Suze Orman vs Annuities and Taxes What Her “No No No” Misses

In a recent episode discussed by *ThinkAdvisor*, Suze Orman reacted to a 50-year-old investor who asked whether buying an annuity with part of her taxable brokerage money “for tax purposes and income” made sense. Orman’s answer: **“No, no, no.”**

That blanket “no” makes for good radio, but it skips two realities:

**1) Tax deferral can boost spendable retirement income. **

Nonqualified annuities (funded with after-tax dollars) allow **tax-deferred growth**. You don’t report annual interest/dividends; you’re taxed when you withdraw. For many higher-tax investors who don’t need current income, letting growth compound can produce **more income later** than holding the same dollars in fully taxable instruments—or even some tax-exempt muni strategies—especially when you ultimately convert to a guaranteed payout.

**2) Lifetime income matters—especially for women. **

A plain, immediate income annuity converts a chunk of savings into a **paycheck you can’t outlive**. Because women live longer on average, the built-in longevity pooling (“mortality credits”) can make an annuity’s guaranteed lifetime income **hard to replicate** with do-it-yourself investing, at similar risk. *ThinkAdvisor*’s commentary specifically notes that for many women, a **simple stream of lifetime income** is a sound fit.

Where Suze’s warning still helps

* **Fees, surrender periods, and complexity** are real. Many variable and indexed annuities add riders and costs you may not need.
* **Liquidity**: if you’ll need money soon, a long surrender schedule is a bad match.
* **Wrong account type**: stuffing annuities inside already tax-deferred retirement accounts “for tax reasons” rarely makes sense.

 When an annuity can actually be smart

* You’re in a **higher tax bracket now** but won’t need the cash for years → defer tax drag, then turn on income later.
* You want **guaranteed lifetime income** to cover non-discretionary expenses in retirement (housing, food, utilities).
* You prefer **behavioral simplicity**: a set, predictable paycheck beats market-timing stress.
* You’re coordinating **spousal longevity** (women often outlive men) and want a **joint life** paycheck that won’t stop too early.

Practical ways to evaluate (without hype)

1. **Start with the job you want the annuity to do.** Income now? Income later? Principal protection? Different annuity types (immediate, deferred income, fixed, MYGA, RILA, variable) solve different problems.
2. **Compare after-fee, after-tax outcomes** to your realistic alternatives (munis, CD ladders, Treasuries, a 4% withdrawal rule). If a carrier quote can’t beat or complement those—pass.
3. **Keep the design simple** unless a rider solves a specific need (e.g., lifetime income with inflation adjustments).
4. **Mind the surrender schedule** and free-withdrawal provisions, and keep an outside cash reserve.
5. **Shop multiple carriers**—pricing can vary widely month to month.

 The big picture

The ThinkAdvisor critique isn’t saying “everyone should buy an annuity.” It’s saying a blanket “never buy for tax reasons” **ignores cases where tax deferral plus longevity pooling produce better retirement math**, particularly for women and for investors holding large taxable balances they don’t need right away. Use the tool where it fits; skip it where it doesn’t.

Sources

* ThinkAdvisor, “Suze Orman Gets It Wrong on Annuities and Taxes,” Expert Opinion, Sept. 15, 2025 (summary points about tax deferral, muni comparison, and women’s lifetime income).
* Wink Intel repost referencing the same column and the listener scenario (age 50, large taxable assets).

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