From 24/7 Wall St. · Jake FitzGerald · · 1m 30s
Suze Orman's Annuity Preferences
Suze Orman still recommends single premium deferred annuities despite past sales of $20m yearly.
In brief
Suze Orman still recommends single premium deferred annuities despite past sales of $20m yearly. Suze Orman defends single premium deferred annuities for those turning 59.5+ but rejects variable annuities due to tax risks. Originally reported by 24/7 Wall St..
Suze Orman's Annuity History
Suze Orman sold $20 million yearly of clients into single premium deferred annuities for years.
“Suze Orman does not hate all annuities in fact, there was a time in the United States for years actually, that I was the number one advisor and salesperson, so to speak, in getting people to buy single premium deferred annuities, I was putting my clients to the tune of about $20 million a year, obviously with a lot of people into annuities.”
Her Current Favorite
She still recommends single premium deferred annuities for those turning 59.5 or older in the surrender period.
“single premium deferred annuities are usually far better for people who know they are going to turn 59 and a half or older in the year that the surrender charge is up, or they’re already older and they’re looking at that as a replacement for, let’s say, a certificate of deposit.”
Additional Favorites
She also likes single premium fixed annuities and indexed annuities with specific interest rates.
“I like single premium fixed annuities where usually you deposit one sum of money, you get a specific interest rate for a long period of time equal to whatever the surrender period is of that annuity. And I don’t mind those indexed annuities.”
Product She Rejects
She strongly dislikes variable annuities due to tax inefficiencies and market risk.
“there is one kind of annuity that I really dislike tremendously, and that is a variable annuity.”
Surrender Charges
Surrender charges can start at 10% and drop to 0% over seven or ten years.
“the surrender charge can start at 10%, going all the way down to 0% over those seven or 10 years”
Tax Code Support
Her timing rule aligns with tax code exceptions for early withdrawals.
“Section 72(q) adds a tax equal to 10% of the taxable portion of early annuity withdrawals, with an exception for distributions made "on or after the date on which the taxpayer attains age 59½" (26 U.S.C. § 72(q)(2)(A)).”
IRAs and Annuities
Annuities in retirement accounts rarely make sense due to tax implications.
“almost in 99% of the cases it makes no sense to put an annuity within a retirement account.”
CD Comparison
Bank CDs offer FDIC insurance while annuities rely on state guaranty associations.
“A bank CD carries FDIC insurance. An annuity’s guarantee rests on the insurer’s claims-paying ability, with a backstop from state guaranty associations whose coverage limits vary by state.”
Current Rates
The national average 12-month CD paid 1.76% as of October 1, 2026, with top banks offering 3-5x that rate.
“The national average 12-month CD paid 1.76% as of October 1, 2026, though top online banks routinely pay 3-5x that average.”
Treasury Benchmark
Treasuries yield 4.90% on November 4, 2026, which Orman uses as her benchmark.
“The 10-year Treasury yielded 4.90% on November 4, 2026.”
Who Fits Her Advice
Retirees in early 60s with already-taxed savings and pre-retirees turning 59.5+ fit her rules.
“Good fit: a retiree in their early 60s with already-taxed savings sitting in CDs, who wants a fixed rate for a set term and won’t need the principal until after the surrender period ends.”
Who Misses Her Advice
Savers under 59.5 needing money soon and retirees focused on lifetime income don’t fit.
“Poor fit: a saver under 59½ who may need the money soon, since a surrender charge and the 10% additional tax could both apply.”
The one thing
Suze Orman defends single premium deferred annuities for those turning 59.5+ but rejects variable annuities due to tax risks.
