June is ‘Annuities Awareness Month’, for those unaware. And with more Americans turning 65 right now than at any point in U.S. history, wealth managers might want to start paying attention to the guaranteed income product for this and many months to come.
Annuity sales recently recorded their tenth straight quarter above $100 billion, according to the Life Insurance Marketing and Research Association. And while many investors approaching retirement have enough savings to meet their retirement goals thanks to the historic bull run in stocks, they apparently also like the idea of being able to preserve wealth while benefitting from a share of the market’s future upside.
A Fixed Index Annuity (FIA), for example, protects 100% of an investor’s principal from market losses. A Registered Index-Linked Annuity (RILA), on the other hand, lets the investor absorb a portion of market losses in exchange for higher growth potential, including higher caps and sometimes uncapped participation. Total U.S. annuity sales hit a record $461.3 billion in 2025, the fourth consecutive year of record growth, with RILAs and FIAs together accounting for 45% of all annuity sales.
Michael Finke, professor of wealth management at The American College of Financial Services, says the limited upside/protected downside story is why the majority of annuity sales have been RILAs and FIAs, while lower recent interest rates have reduced the appeal of fixed deferred annuities. FIAs also remain the most common annuity chassis for providing a lifetime income guaranty through living benefits.
“While annuitization is still rare, it is growing especially among firms such as Fidelity that have taken a more enlightened approach to the benefits of lifetime income,” Finke said.
In Finke’s view, the biggest change is the sharp reduction in pensions among young Baby Boomers and Gen X. According to the Center for Retirement Research, the percentage of workers with any pension fell from 50% among those born in 1947 to 25% of those born in 1953 to just 10% of those born in 1958. As a result, today's retirees will need to spend from savings in order to maintain the same lifestyle they had before retirement, and economic theory says that annuities are the most efficient way to generate income.
Annuities have commonly had their place in financial planning, offering tax deferral in non-qualified savings, lifetime income, and the ability to control investment risk. However, advisor compensation has always been tricky when it comes to annuitized products. That said, Finke says annuities designed for fee-only advisors are becoming increasingly popular.
“I have talked to a number of advisors who never considered annuities see the benefit of recommending them to clients interested in creating a stable income to cover basic expenses,” Finke said.
Elsewhere, Rich Romano, CEO of FIDx, believes the most important shift toward annuities is structural, and it is happening at the platform level. Technology in the wealth environment has matured to the point where annuities can be researched, transacted and managed inside the same systems advisors already use for the rest of a client's portfolio. That institutional piping has eliminated the technology barrier that held back adoption for years, and firms that have committed to these platforms are seeing the gains, according to Romano.
“Rates have contributed, particularly in fixed annuities and MYGAs (Multi-Year Guaranteed Annuity), and client anxiety about longevity is real, but neither force would translate into ten straight quarters above $100 billion without the infrastructure finally in place to act on that demand,” Romano said.
He adds that the real test is whether that demand sustains itself as rates normalize, believing that it depends on whether advisors can access and manage these products as seamlessly as the rest of the client portfolio.
“Clients are not simply afraid of running out of money, they are afraid of running out of lifestyle. Today’s retirees and pre-retirees are more savvy than in the past, and they’re thinking about longer retirements and whether they can keep spending with confidence for 25 or 30 years. That changes the advisor conversation from accumulation alone to durable income, protected growth and giving clients permission to use the assets they have spent decades building,” Romano said.
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