Annuity Sales Hit a Record High in 2026. Is One Right for You?
U.S. annuity sales hit $464.1 billion in 2025, the fourth straight year of record sales. 2026 hasn’t slowed down. Sales topped $107.4 billion in the first quarter. The second quarter hit $123.9 billion, the best quarter LIMRA has ever tracked.
None of that tells you whether an annuity belongs in your plan. A banner year for the industry adds up millions of separate decisions. Those buyers had different income, spending, and accounts than you do.
The question is whether the reasoning behind those purchases applies to you.
Why Are Annuity Sales at a Record High?
Annuity payout rates track prevailing interest rates. Rates have stayed higher for longer than most buyers expected after the 2022 and 2023 hikes. That lets insurers promise more monthly income for the same lump sum than they could a few years back. Two other forces add to the surge: market swings and a demographic wave hitting retirement age.
Market swings played a role too. LIMRA points to a stretch of sharp volatility in 2026. It pushed demand toward products that offer protected growth and guaranteed income at the same time. A lot of savers grew tired of watching their balances swing and wanted some of that money to sit still.
Demographics add the largest push. More than 4.1 million Americans turn 65 every year through 2027, a wave the industry calls Peak 65. “Many don’t have pensions or other income sources to meet their basic living expenses in retirement,” LIMRA’s Bryan Hodgens said of the group.
For a lot of these buyers, a guaranteed check matters more than beating the market. LIMRA expects sales to hold above $450 billion in 2026 on that same demand. Maturing contracts and broader distribution add to it, even as the Fed keeps cutting rates.
Not All Annuities Are Selling for the Same Reasons
That headline number hides a split. Some products grew because buyers wanted more market upside. Others grew because buyers wanted steady, guaranteed income each month. Here’s how the first quarter of 2026 broke down by product:
| Product | Q1 2026 Change | What It Does | Typical Costs |
| Fixed-rate deferred annuity | -12% | Locks in a set rate for a set term, close to a CD | Low, built into the rate |
| Fixed indexed annuity (FIA) | -4% | Credits gains tied to a market index while protecting your principal | Rider fees for guarantees |
| Registered index-linked annuity (RILA) | +21% | Similar to an FIA, with more upside and some downside exposure tied to the index | Rider fees for guarantees |
| Single premium immediate annuity (SPIA) | +22% | Converts a lump sum into income payments that start right away | Low, built into the payout |
| Deferred income annuity (DIA) | +5% | Delays the income start date for a larger eventual payout | Low, built into the payout |
LIMRA credits the FIA decline to buyers moving toward RILAs for more upside in a strong stock market. Both products protect your principal. Only one caps how much of the market’s gain you keep.
Traditional variable annuities sit outside this table because they work differently. They invest directly in market subaccounts, similar to mutual funds, with no principal protection built in. Sales grew 17% in the same quarter, to $17.2 billion, as some buyers traded protection for full market exposure and the option to add income guarantees on top.
Knowing which product a headline is naming tells you whether it has anything to do with your own situation.
An Annuity Is Only One Layer in Your Income Stack
For most buyers, an annuity works as one layer in an income stack. That stack also includes Social Security, savings withdrawals, and, for a shrinking number of retirees, a pension.
Social Security works as a guaranteed income floor for most retirees. How much of that floor you get depends on when you claim it. Some retirees look at their expected benefit and realize it won’t cover essential expenses. They go looking for a second floor to fill the shortfall. An annuity is one option for building it, alongside other approaches with their own costs.
The stack only works when each layer is sized right. An annuity that duplicates income you’d already get from Social Security or a pension costs you flexibility without adding protection. One that’s too small to matter just adds cost.
The Costs That Don’t Show Up in the Sales Numbers
Every annuity purchase deserves the same scrutiny as any other five- or six-figure decision. That’s true no matter how the industry’s numbers look this year.
Most annuities charge a surrender fee if you withdraw money early. That fee often runs 5 to 10% in the first few years, stepping down over time. Either way, the money stays locked up for a stretch, sometimes years. The rider fees in the table pay for guarantees on variable and indexed products. You pay them whether or not you ever use what they guarantee. Read the illustration before you sign anything. Ask what happens to those fees if you never use the rider.
Taxes deserve a second look too. Growth inside a non-qualified annuity grows tax-deferred. Compare that to a taxable brokerage account, taxed at long-term capital gains rates. Or compare it to money you could put into a Roth account instead. Deferral pushes the tax bill down the road; it still arrives. Withdrawals from a non-qualified annuity’s gains get taxed as ordinary income. For most savers, that’s a higher rate than long-term capital gains.
Learn about avoiding common annuity mistakes before you commit to one.
Ask Two Questions When You Consider an Annuity Recommendation
Most annuities reach buyers through an agent or advisor who earns a commission on the sale. It’s built into the product and paid by the insurer, and it can shape the terms you’re offered. Before you weigh any recommendation, ask two questions directly: How are you paid on this? And which standard are you held to?
The standard is higher than it used to be, and most people haven’t caught up to it. Annuity sales now have to clear a best interest bar in every state. That comes through the NAIC’s model regulation, or in New York, an equivalent rule of its own. That’s a real jump from the old suitability standard: a recommendation only had to be generally appropriate for your situation.
Two standards can sit above that floor. Variable annuities and RILAs are registered securities. A broker-dealer representative selling either one also answers to the SEC’s Regulation Best Interest. A fiduciary adviser owes you that same duty across the whole relationship, not just at a single sale, and that duty typically comes without a commission attached.
An advisor with no commission riding on your answer may still land on the same recommendation. But you’ll know it wasn’t the commission that got them there.
Averages Miss What Your Own Plan Needs
Vanguard built guaranteed income into some workplace retirement plans this year, and its own researchers were candid about the limits. The initiative is designed to improve outcomes across a broad, varied group of savers. But your own numbers are the ones that matter for your plan. The same logic applies to a strong industry sales year.
The remaining question is what happens to the rest of your portfolio, the money an annuity never touches. A portfolio that loses value early in retirement, while you’re also withdrawing from it, faces real sequence-of-returns risk. An annuity protects only the money inside it.
How to Decide If an Annuity Fits Your Retirement Plan
The only way to know if an annuity improves your outcome is to run your own numbers next to it. A generic projection built for the average saver can’t answer that for you.
- Model your plan twice in the Boldin Planner, once with an annuity built in and once without it.
- Compare the two versions on projected out-of-money age and estate value.
- Run the Lifetime Annuity Calculator with a few different product types. A fixed-rate deferred annuity and an immediate income annuity produce different numbers for the same lump sum.
- Read through the full tradeoffs before you commit to anything.
Those two numbers, projected out-of-money age and estate value, help decide this for you. This year’s sales total is just a data point. What you do with your own plan is still your call, and that’s a good position to be in.
Frequently Asked Questions
Annuity sales have climbed for four straight years, and no single reason explains it. Interest rates have stayed high enough to make payout amounts attractive. Market volatility in 2026 pushed some savers toward products that protect against losses. A growing wave of Americans reaching age 65 has added buyers with no pension to fall back on.
Whether an annuity is a good investment in 2026 depends on your own situation. The current rate environment makes payout amounts higher than they’ve been in decades, which helps buyers who want guaranteed income. Your expenses and other income sources matter. So does how much of your portfolio you’re willing to convert into a fixed payment.
Annuities carry real downsides in exchange for guaranteed income: reduced liquidity, fees, and how gains get taxed. Most annuities charge a surrender fee if you withdraw money early. That fee often runs 5 to 10% in the first several years. Riders that add guarantees carry their own costs. Growth inside a non-qualified annuity gets taxed as ordinary income when you withdraw it. For most savers, that is a higher rate than long-term capital gains.
Whether an annuity fits a retirement plan comes down to modeling it two ways. Run it once with the annuity built in, and once without it. Compare the two versions on projected out-of-money age and estate value. That shows whether the guaranteed income is worth what it costs in flexibility. If the annuity version holds up better on both measures, it’s earning its place in the plan.
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