Displaying items by tag: annuities

A wave of fixed annuity contracts sold in 2020 with five-year surrender periods is maturing, potentially unleashing over $70 billion in investable assets. Many of these annuities, purchased at average rates around 2%, are now competing with products offering closer to 5%, giving investors a strong incentive to move their money. 

While some clients may shift to higher-yielding fixed annuities, the trend is expected to boost flows into less capital-intensive options like RILAs and fixed indexed annuities. Insurers with strong distribution networks and scalable, SEC-registered products could be best positioned to capture this movement. 

At the same time, many traditional fixed annuity issuers are stepping back due to capital constraints, relying more on reinsurers or exiting the market altogether. For advisors, the end of these surrender periods presents both a challenge and opportunity—clients may be targeted by competitors, but those assets can also be redirected into new, potentially more flexible portfolio strategies.

Finsum: Paying attention to these trends in annuities can give advisors a leg up on the competition.

In a high-inflation environment, variable annuities offer a unique blend of investment growth and guaranteed income, making them an attractive option for certain retirees. Unlike fixed annuities, their value rises and falls with market performance, allowing for inflation-beating potential over time. 

They also provide tax-deferred growth and the option to convert savings into a predictable income stream that can last for life. Optional riders can offer added benefits like long-term care coverage or income guarantees, though these come with additional fees. 

However, high costs, market risk, and limited liquidity make them unsuitable for all investors. 

Finsum: For those who’ve maxed out other retirement vehicles and can tolerate some risk, variable annuities may help protect purchasing power while delivering steady income.

With more retirees seeking financial security, index annuities have gained popularity in 2025 for their mix of protection and growth potential. Index Annuities shield savings from market downturns while allowing interest accumulation when markets rise, making them a safer alternative to traditional investments. 

They also offer guaranteed lifetime income, ensuring retirees don’t outlive their savings, a critical feature as life expectancy increases. Rising interest rates have further enhanced index annuities appeal, as new contracts now offer better returns compared to bonds. 

Additionally, their tax advantages, including tax-deferred growth and flexible withdrawals, help retirees manage their financial burden efficiently. 

Given these benefits, index annuities are becoming a key component of retirement planning in an uncertain economic climate.

Planning for a financially secure retirement requires careful savings and multiple income streams to sustain one’s lifestyle after leaving the workforce. While IRAs, 401(k)s, and pensions are common sources of retirement income, annuities are another option to consider, that can suit investor looking to maximize income. 

Annuities come in two main forms: immediate annuities, which provide guaranteed lifetime income starting right away, and deferred annuities, which allow funds to grow tax-deferred until withdrawals begin. Robbins argues that immediate annuities offer unique benefits due to mortality credits, helping those who live longer receive higher payouts. 

Though some financial experts debate their effectiveness, annuities can provide a stable income stream, particularly when paired with Social Security and other investments. 

FINSUM: For retirees seeking predictability in their finances, annuities may serve as a valuable tool for long-term financial security.

DC plan sponsors must balance the need for steady lifetime income with participants’ desire to retain asset control. According to recent survey data, many individuals want guaranteed income but are reluctant to lock away their savings, making flexible solutions essential. 

A guaranteed lifetime withdrawal benefit (GLWB) offers income security while allowing participants to maintain access to their funds, unlike traditional annuities that require upfront asset surrender. 

While single premium immediate annuities (SPIAs) and qualified longevity annuity contracts (QLACs) provide reliable payouts, they often limit liquidity and growth potential. Self-insuring through investment withdrawals may work for those with substantial outside income but poses risks for the average retiree. 

Finsum: Offering adaptable income solutions like the GLWB allows plan sponsors to support a wider range of participants without sacrificing financial stability.