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When it comes to retirement planning, more Americans are as a way to lock in guaranteed income. Total annuity sales hit a record $385 billion in 2023, jumping 23% from the previous year's already-record performance, according to . This reflects the overall desire that retirees have for stability in . And, with compared to just a few years ago, annuities may look especially attractive for those who want a reliable payout they can't outlive.

But as with most financial products, the headline promise isn't the full story. While about income during retirement, they also come with complex contracts, varying payout structures, and, perhaps most importantly, fees that aren't always obvious upfront. In fact, annuity contracts are often criticized for burying costs deep in the fine print, leaving buyers unaware of how much of their hard-earned money might get siphoned off before they see a payout.

That doesn't mean annuities should be written off entirely, though. For many, they can still play a valuable role in securing a comfortable retirement. The key is knowing what to expect and where to look for hidden costs. 

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While every annuity provider markets their products differently, a handful of fees pop up consistently, and they can have a big impact on the value of your investment over time. If you're considering , here are some of the ones you should be especially wary of:

One of the most common charges in variable annuities is the . This extra charge typically covers the insurance company's cost of guaranteeing lifetime income and death benefits, and it can run between 1% and 1.5% annually. That may not sound like much at first glance, but when compounded over decades, it can significantly eat into the growth of your annuity account.

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are supposed to cover expenses tied to administrative tasks, like recordkeeping, paperwork and general account maintenance. In reality, these types of fees often function as another layer of recurring cost that chips away at your returns. While some insurers will waive these fees for those purchasing larger annuity accounts, smaller contracts can come with administrative fees that skim a few hundred dollars off the top annually just to keep the annuity running.

If you purchase that lets you allocate funds to subaccounts (similar to mutual funds), you'll likely face underlying investment management fees. These costs are essentially expense ratios that go to the fund managers, and they can range widely depending on the funds you choose. Combined with the other annuity charges, though, it's not unusual for the total costs of investment management fees to approach 3% per year.

Many annuity buyers are , which are add-ons that can provide features like guaranteed minimum withdrawal benefits or enhanced death benefits. While these can be valuable depending on your goals, they almost always come with extra charges, which vary but are often between 0.5% to 1% annually. That's charged on top of the standard annuity fees, so layering riders can quickly make the annuity contract much more expensive than anticipated.

Annuities are designed as long-term investments, which means that taking your money out early can be costly. In many cases, surrender charges apply if you withdraw more than the permitted amount within the first several years of owning the annuity. These fees can start as high as 7% to 10% and will typically gradually decline over time. For retirees who might need liquidity, surrender charges can be an unpleasant surprise.

Annuities can provide the security of steady retirement income, but they're not free money machines. The fees, especially the ones buried deep in the fine print, can add up and, in some cases, could substantially reduce your returns. Before buying an annuity, make sure you fully understand every potential cost, from mortality and expense fees to surrender charges for withdrawing your money early.

If you're unsure about whether the fees you may be charged are worth it, consider having an expert help you evaluate whether the guarantees outweigh the costs, and whether a different annuity — or an entirely different retirement strategy — might better serve your long-term goals. With your retirement savings on the line, a little extra diligence can go a long way in ensuring your money works for you, not just for the insurance company.