Record High Annuity Sales and Future Trends in Retirement Planning
Annuity sales hit a record high for the fourth consecutive year in 2025, highlighting sustained growth in the insurance industry. According to the "2026 Retirement Outlook" report from Athene Annuity & Life Co., co-president Mike Downing projects annuities will continue to be a key element in retirement planning for 2026, thanks to their potential for higher yields compared to traditional options like certificates of deposit. Downing emphasized annuities' role in providing stability and guaranteed income, crucial in retirement strategies.
Continued Growth in Annuity Sales
Industry insights from LIMRA suggest that annuity sales will remain strong, exceeding $450 billion annually in 2026. This growth is fueled by consumer interest, innovative product offerings, and enhanced technologies. In 2025, retail annuity sales surpassed $460 billion, continuing the upward trend. Registered index-linked annuities (RILAs) are expected to maintain this growth trajectory, with an estimated $75 billion in sales projected for both 2025 and 2026.
The demand for fixed-indexed annuities also rose sharply, nearly doubling sales to $126 billion by 2024, and this trend is anticipated to persist. Fee-based annuities have benefited from technological advancements, resulting in doubled sales since 2020, showcasing the impact of technology on product accessibility and consumer convenience.
Regulatory Developments and Technological Advancements
The 2025 Defined Contribution Survey by PLANSPONSOR reveals that while few plan sponsors currently include insurance-based income products in retirement plans, interest is growing. At a PLANSPONSOR livestream, LIMRA's director of annuity research, Keith Golembiewski, underscored the significance of regulatory compliance requirements. He noted the Department of Labor's decision to classify certain lifetime income strategies as qualified default investment alternatives, potentially boosting adoption rates.
Athene's Downing highlighted technology's transformative potential in streamlining the annuity purchasing process, drawing parallels to mutual fund acquisitions. A notable initiative by the Insured Retirement Institute, "Digital First for Annuities," significantly reduced annuity exchange times, marking considerable progress in modernization efforts.
Future Outlook and Risk Management
Prudential Financial's David Blanchett predicts moderate growth in annuity integration within defined contribution plans, driven by insurers' innovations and increased adviser advocacy for annuities as lifetime income solutions. He pointed out the critical role of annuities in longevity risk management, noting they could reduce required savings by about 30%.
Brant Wong from Principal Asset Management emphasized the rapid evolution in the annuity sector, recognizing these products as effective risk mitigation tools, albeit not suitable for everyone. The ongoing development of annuities underlines their rising significance in the insurance landscape, affirming their essential role in modern retirement planning.