--- title: Why More Americans Are Buying Annuities for Retirement description: Sales of annuities, which can provide a steady income stream in retirement, are breaking records as Americans try to lock in high rates. authors: - name: Pete Grieve role: Lead News Reporter url: https://money.com/author/pete-grieve/ bio: Pete Grieve is a personal finance reporter. In his time at Money, Pete has covered everything from car buying to credit cards to the housing market. education: University of Chicago, BA Political Science at_money_since: 2022 articles: 598 covers: - Retirement - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Shopping - Taxes social: - https://twitter.com/pete_grieve - https://linkedin.com/in/pete-grieve-b5aa02138 - https://www.facebook.com/petegrieve4 editors: - name: Kaitlin Mulhere role: Editor url: https://money.com/author/kaitlin-mulhere/ bio: Kaitlin Mulhere is an editor at Money.com. Since joining in 2015, she’s written and edited about a variety of personal finance topics, including banks, credit, student debt, saving strategies and more. education: University of Florida at_money_since: 2015 articles: 217 covers: - Retirement - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Shopping - Taxes social: - https://twitter.com/KMulhere - https://www.linkedin.com/in/kaitlin-mulhere-64503048/ published: '2024-02-07T17:21:10.000Z' modified: '2024-02-08T14:09:46.000Z' section: Retirement tags: - News word_count: 946 canonical: https://money.com/annuity-sales-breaking-records/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Photo-illustration of stack of money growing, with upward arrows in the background.](https://img.money.com/2024/01/News-Annuities-Sales-Soaring.jpg) Sales of annuities, a financial product that can provide a lifetime income stream in retirement, are smashing records as Americans look to lock in high interest rates. Sales of one type of annuity in particular, fixed-rate deferred annuities, have more than tripled in the last two years, rising to $164.9 billion in 2023 up from just over $50 billion in both 2020 and 2021, according to trade association LIMRA. With annuities, you pay a lump sum to an insurance company to receive monthly payments for life that begin on an agreed upon date, which Americans commonly align with their retirement. Annuities with deferment periods are popular for people in their 50s or 60s who want a product that will grow tax-deferred before they convert it to a steady income stream. Fixed-rate deferred annuities are the "most basic product" out of the many different types of annuities because they grow at a guaranteed annual rate, says Chris Blunt, CEO of F&G, an annuity provider that is a subsidiary of Fidelity National Financial. His company has seen 46% growth in the space in the past year, thanks in part to more attractive rates. ## With a Life Insurance policy, you can take care of your family the right way ### Should anything happen to you, you'll want to leave your loved ones a financial nest egg for their wellbeing. Click on your state to find out more. [Get Quotes](https://money.com/pr/sfdaa7498f62?ap_referrer=%2Fannuity-sales-breaking-records%2F) In 2022, rates were in the arena of 2.5%, Blunt says. But last year, they soared and now sit around 4% to 5%. Fixed-rate deferred annuities are [behaving similarly to certificates of deposit (CDs)](https://money.com/best-time-to-buy-cd-2024/), which also provide guaranteed returns at rates that typically move in tandem with the Federal Reserve’s rate decisions. With inflation cooling and the Fed possibly gearing up for rate cuts in 2024, people are seizing on what could be the last chance to get a rate in the ballpark of 5%. Unlike CDs, however, annuities are not insured by the Federal Deposit Insurance Corp. (FDIC), and there are typically higher fees as well as a 10% early withdrawal penalty for distributions before age 59 ½. These are clear tradeoffs, but in exchange, you can usually get a better rate with an annuity than a CD. ## Annuity sales broke records in 2023 Bryan Hodgens, head of research at LIMRA, says the first jump in annuity sales occurred in late 2022 and early 2023 as interest rates were rising amid high inflation. "When you had these pretty dramatic increases in interest rates, consumers could now get much higher rates on these fixed annuities," he says. Rates have increased in large part because annuity companies invest your dollars in bonds and other securities, which are generating higher returns. Annuity companies were faster to react to the changes in market conditions and adjust their rates compared to banks offering similar products, according to Eric Henderson, president of Nationwide Annuity. "As the Fed raised rates, banks tended to be slow to raise their CD rates where the insurance industry, the annuity industry moved more quickly, so I think that’s what really caused the surge at first," Henderson says. He adds that this was around the time when recession fears were peaking, which meant there was high demand for safe places to stash money that offered returns without the risk of the stock market. Of course, a recession hasn't materialized and "you would have been better off actually investing in the market, but you didn't know that at the time," Henderson says. Hodgens says the fourth quarter of 2023 marked a second big spike in annuity sales. Sales have boomed again more recently because the Fed is indicating that rate cuts are on the horizon, which is spurring people to buy while current annuity rates are still available. ## Don't wait until it's too late to get Life Insurance ### Get peace of mind knowing that your loved ones will be taken care of if anything unexpected happens. Click below to get a free quote today! [Get Quotes](https://money.com/pr/a66759078e7a?ap_referrer=%2Fannuity-sales-breaking-records%2F) ## Higher rates create opportunities for retirement savers It’s not just fixed-rate deferred annuities that are hot, Hodgens says, noting that fixed indexed annuities and registered index-linked annuities (RILAs) are also selling at record levels. Like fixed-rate deferred annuities, these products are common tools for retirement planning and they're more attractive in a high-interest rate environment. With fixed indexed annuities, you don't have a constant rate of return like with the fixed-rate variety. Instead, they're tied to indexes like the S&P 500, but your principal investment is guaranteed, meaning you can't lose any money. In exchange, the upside — or how much you can earn — is capped. RILAs are almost exactly the same except instead of not being able to lose money, the [insurance company](https://money.com/best-life-insurance/) commits to absorbing the first 5% or 10% of loss in the event the index declines in a year, Butler says. There’s still a cap on the upside, but it’s not as large. Annuities aren’t the right retirement planning tool for everyone: Some have high fees, and alternative retirement savings options may offer greater flexibility or the potential for higher returns. But they can be appealing to people who want a lifetime income stream. One strategy is to [combine annuities with Social Security](https://money.com/investing-strategy-better-retirement-lifestyle-annuities/) so you can ensure a level of comfort — or at least income — in retirement. While there's been plenty of talk around the pain for consumers that comes with high interest rates, annuities are a good example of how there's also been the emergence of some unique opportunities in fixed income to set yourself up for the future, Hodgens says. "Most Americans loved their pension plan, it’s just most of us don't have a pension plan anymore," Blunt says. Annuities, though, can provide a similar peace of mind that you won't outlive your savings. "That can be game-changing in an overall financial plan," he says. "It gives people more courage to be a little more aggressive on the rest of their savings." ![](https://s3.consumersadvocate.org/prd/image/image/39016/medium_5717987a-9caa-43aa-986b-47c57fcea410.webp) Secure your family's future with Corebridge Direct Life Insurance [Get Quotes](https://money.com/pr/uc9798ea5ecc?ap_referrer=%2Fannuity-sales-breaking-records%2F) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/annuity-sales-breaking-records/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Retirement", "item": "https://money.com/retirement/" }, { "@type": "ListItem", "position": 3, "name": "Annuity", "item": "https://money.com/annuity/" }, { "@type": "ListItem", "position": 4, "name": "Why More Americans Are Buying Annuities for Retirement" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/annuity-sales-breaking-records/#webpage", "url": "https://money.com/annuity-sales-breaking-records/", "name": "Why More Americans Are Buying Annuities for Retirement", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2024-02-07T17:21:10.000Z", "mainEntity": { "@id": "https://money.com/annuity-sales-breaking-records/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/annuity-sales-breaking-records/#breadcrumb" }, "dateModified": "2024-02-08T14:09:46.000Z" }, { "@type": "NewsArticle", "headline": "Why More Americans Are Buying Annuities for Retirement", "articleSection": "Retirement", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2024/01/News-Annuities-Sales-Soaring.jpg", "width": 2880, "height": 1920, "caption": "News-Annuities-Sales-Soaring" } ], "author": [ { "@type": "Person", "name": "Pete Grieve", "url": "https://money.com/author/pete-grieve/", "@id": "https://money.com/author/pete-grieve/#author", "description": "Pete Grieve is a personal finance reporter. 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