Interesting Things to Know
Annuities Set Record Growth in Early 2025 as Retirees Seek Stability
Annuities are having a record-breaking year. According to LIMRA, a national trade association for the retirement and insurance industry, annuity sales hit $105 billion in the first quarter of 2025, marking the sixth consecutive quarter with sales over $100 billion.
The trend highlights how more Americans, especially retirees and older investors, turn to annuities to protect their savings from economic uncertainty. In a year marked by market shifts and the anticipation of Federal Reserve interest rate cuts, annuities are emerging as a popular and practical choice.
Why the Surge?
One key reason is strong fixed interest rates. In May, many insurers offered fixed-rate annuities at more than 6 percent—a rate that outpaces most high-yield savings accounts and certificates of deposit (CDs). These competitive returns prompted investors to lock in those rates ahead of expected drops in interest later this year.
Another factor fueling growth is the popularity of fixed-rate deferred annuities. These allow investors to grow their money at a set rate and begin receiving payments at a later date. This model allows people to plan for future income while avoiding exposure to stock market fluctuations.
MYGAs: A Popular Pick for Security
Multi-Year Guaranteed Annuities (MYGAs) are also drawing interest, particularly from those nearing or already in retirement. MYGAs offer a fixed rate for a set term—often three to ten years—and provide a combination of stability and growth. According to Kiplinger, MYGAs work well for risk-averse savers who want predictable returns and tax-deferred growth without tying up money in the volatile stock market.
Compared to CDs, MYGAs can offer higher interest rates over longer terms. They also allow investors to avoid paying taxes on the interest until the money is withdrawn, making them appealing for retirees who want to manage their taxable income over time.
The Bottom Line
The current rise in annuity sales reflects broader financial concerns and a desire for predictable income. With the Federal Reserve signaling potential rate cuts ahead, many investors are seeking options that lock in returns before rates fall. Annuities—particularly fixed-rate options and MYGAs—offer both growth and peace of mind in a changing financial landscape.
