Yes, they generally get wiped out by inflation. You can get annuities whose payments increase by a fixed amount every year, or that increase based on the performance of the S&P 500 or whatever, but AFAIK you can't get an annuity with inflation-indexed payments today. I agree that that limitation makes them pretty crappy. Inflation-indexed annuities used to be available (I think until 2010 or so), but companies broadly stopped selling them because hedging long-term inflation is expensive.