Rising Annuity Sales Reflect Changing U.S. Retirement Income Strategies

The retirement landscape for baby boomers is evolving, with a significant portion lacking access to traditional pensions. While over 11,200 Americans reach age 65 daily, only 40% of preretirees have pension access, necessitating greater reliance on personal savings. This shift drives increased interest in annuities as a means to ensure stable income in retirement. LIMRA research highlights that nearly half of preretirees are open to purchasing annuities, but ownership remains low at one in five. Insurance carriers have responded by expanding annuity offerings, particularly with products that protect against market volatility, inflation, and longevity risks. Rising interest rates have also enhanced annuity attractiveness by improving participation and cap rates. Notably, sales of fixed-rate deferred annuities tripled from $52 billion in 2020 to $153 billion in 2024, while registered index-linked and fixed indexed annuities more than doubled. Financial professionals play a crucial role in this market shift, with 75% of investors buying annuities following their advisors' recommendations. Advisors have adjusted retirement strategies, with two-thirds increasing annuity allocations to address client concerns. Consumer awareness of annuities has risen from 36% in 2020 to 44% in 2024, accompanied by greater advisor support. Investors working with advisors show higher annuity interest and retirement confidence than those managing independently. LIMRA's acquisition of the Alliance for Lifetime Income underscores its commitment to educating the market on annuities' role in delivering retirement security. These developments indicate a transformative trend toward leveraging annuities to meet evolving retirement income needs amid changing economic conditions.