Market Overview
The U.S. annuity market has experienced consistent growth, with the latest data from LIMRA revealing a remarkable 16 consecutive quarters of sales increases. This steady upward trajectory underscores the growing demand for guaranteed income products, which have become a reliable choice for consumers seeking stability amid uncertain economic conditions.
According to LIMRA’s third-quarter report for 2024, annuity sales jumped by 29% compared to the previous year, reaching $114.6 billion. This performance nearly matched the record set in late 2023, highlighting the market’s continued strength. Year-to-date, total annuity sales surged by 23%, bringing the total to $331.2 billion—a new high for the industry.
Fixed Annuities Driving Growth
A significant driver behind this growth has been the strong demand for fixed annuity products, which provide a secure income stream for retirees. In particular, fixed-rate deferred annuities (FRD) have seen notable gains, with sales increasing by 17% in 2024 to reach $124.4 billion. These products have proven especially attractive due to market volatility and the anticipation of interest rate cuts. As economic conditions continue to shift, experts expect the demand for fixed annuities to remain strong.
Index-Linked Annuities Gaining Traction
Registered index-linked annuities (RILAs) have also seen impressive growth, with sales up 37% yearly, reaching $17.3 billion in Q3 alone. For the first nine months of 2024, RILA sales totaled $48.2 billion. LIMRA attributes this surge to the unique appeal of RILAs, which offer downside protection and the potential for upside growth, making them a preferred choice for many consumers looking to strike a balance between security and growth.
Fixed indexed annuities (FIAs) have also posted record results, with a 54% increase in sales from the previous year. The sales for FIAs reached $34.9 billion in the third quarter, more than double what they were just three years ago. These products are growing in popularity because they offer consumers protection from market downturns while still providing growth opportunities, an appealing feature given the uncertainty surrounding financial markets.
Income Annuities on the Rise
Income annuities, which offer regular payouts to policyholders, have also seen strong sales. Single premium immediate annuities (SPIAs) rose 17% year over year, while deferred income annuities (DIAs) surged by 40%. The year-to-date sales of SPIAs reached $10.4 billion, while DIAs totaled $3.8 billion, both showing a steady rise in consumer interest for guaranteed retirement income.
Future Outlook
The latest data from LIMRA indicates that the annuity market remains a key player in retirement planning, with products like fixed annuities, RILAs, and FIAs continuing to drive sales. As the need for reliable income solutions in retirement grows, these annuities will likely remain an essential component of many financial strategies. With continued economic uncertainty, LIMRA expects annuity sales to stay strong, helping consumers secure their financial futures.
If you’re considering whether annuities are suitable for your retirement strategy, evaluating your financial goals, risk tolerance, and income needs is essential. While annuities may provide stability and guaranteed income, they may not suit everyone. Consult with a trusted financial advisor who may help assess your individual situation and guide you toward the best retirement solutions.
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