US Annuity Sales Near Record as Investors Seek Income Certainty Amid Market Volatility

In the first quarter of 2025, US annuity sales reached $105.4 billion, just 1 percent below the record sales from the previous year, according to LIMRA data. Despite market volatility, some companies like Jackson Financial reported a 9 percent increase in retail annuity sales. This rise in annuity interest coincides with a 4.6 percent negative return in the S&P 500 and significant fluctuations in market volatility as measured by the VIX index.

Financial professionals increasingly recognize annuities as tools to reduce exposure to market volatility and diversify portfolios, with 91 percent agreeing they protect clients against market swings and 86 percent endorsing their diversifying benefits. Experts highlight annuities that offer lifetime income guarantees as effective means to mitigate sequence of returns risk and provide reliable income in retirement, a key concern for many investors amid economic uncertainty. Different types of annuities address specific client needs: fixed annuities with withdrawal riders for stability and inflation protection; registered index-linked annuities (RILAs) for balanced growth and loss protection; fixed index annuities (FIAs) to minimize interest rate risks; and variable annuities (VAs) to hedge longevity and sequence risks. While alternatives such as buffered structured notes, US Treasuries, market CDs, high-yield savings accounts, and dividend stocks offer varying degrees of liquidity and risk management, annuities uniquely address longevity risk by providing guaranteed lifetime income.

However, annuities have historically been viewed as more expensive than traditional stocks and bonds, which has limited advisor discussions. Shifting the framing from investments to lifestyle income needs can illustrate an annuity's cost-effectiveness and benefit in securing essential expenses. Industry players like Insurance Overlays marketplaces facilitate integrating annuity solutions into managed accounts, broadening advisor and client access to guaranteed income streams.

Financial advisors emphasize building a guaranteed income 'bucket' within retirement portfolios to ensure coverage for basic living expenses, recognizing annuities, pensions, social security, and cash value life insurance as critical sources of financial certainty. This trend reflects growing investor demand for stability amid continued market and economic uncertainties, reinforcing annuities’ role in retirement planning and portfolio insurance strategies.