Displaying items by tag: annuities

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.

Structured annuity sales soared to a record $62.9 billion in 2024, marking a 39.6% increase from the previous year as investors sought downside protection with upside potential. The fourth quarter alone saw $17.2 billion in structured annuity sales, continuing the product’s rapid ascent. 

Indexed annuities also experienced strong growth, hitting $130 billion for the year despite a quarter-over-quarter dip. Meanwhile, variable annuities rebounded sharply, posting a 25.4% annual increase to $61.3 billion, driven by stock market gains and growing advisor demand. 

Income annuities, a staple for retirees and income-focused investors, reached $14.9 billion in total sales, with New York Life maintaining its dominant market share. While some fixed annuity segments faced headwinds, the broader annuity market remained robust, reflecting investors’ shifting priorities in an evolving economic landscape.

Finsum: With a large boomers currently in the midst of retirement, we could see more demand for annuities from the largest generation.