No one knows what the future will bring. Except for annuity owners.
Americans continue to purchase annuities in record numbers as they seek the predictability that comes from guaranteed lifetime income.
An annuity is a contract between a customer and a life insurance company. The customer pays the insurer, which then pays the customer per the terms spelled out in the contract.
Very few companies offer traditional lifetime pension benefits to new employees anymore. But with an annuity, a worker can establish their own guaranteed pension-like income stream that will last for a lifetime.
Annuity sales in the United States rose to a record $181.1 billion in the first half of 2023, and are on pace to break the record of nearly $313 billion set last year. That mark smashed the previous record of $265 billion.
The concept of saving for retirement seems simple enough: set aside part of your paycheck today and hold onto it so you can pay your expenses after you retire.
If only it were that easy! How many people know for sure when they will retire? And who can predict with any certainty how many years of retirement they’ll need to save for?
Saving for retirement is hard enough in good times. It’s especially challenging in volatile times like today with higher interest rates and the rising cost of goods and services.
It’s no wonder that retirement savers’ biggest fear is outliving their assets. Indeed, 81 percent of respondents in a Morning Consult Survey reported they have concerns about having enough funds to last them through retirement.
The guaranteed lifetime income from an annuity provides peace of mind. That explains why 73 percent of pre-retirees ages 45 to 65 years old express interest in independently purchasing a guaranteed lifetime income product that pays out like a pension.
Annuities remain attractive across the spectrum and especially with modest income earners. In fact, the median household income of an annuity owner is $70,000.
It’s not surprising why Americans from all walks of life are increasingly choosing annuities to be an integral part of their retirement strategy. All signs are pointing toward continued record annuity sales in the years ahead. It is essential that information about this vital tool for financial certainty remains accessible to all Americans.
Susan K. Neely was President and CEO of the American Council of Life Insurers (ACLI), the nation’s leading trade association determined to help families live better lives by achieving financial security and certainty. As president and CEO, Neely drove public policy and advocacy on behalf of ACLI’s member companies that represent 93 percent of industry assets and serve 90 million families. She is CEO Emeritus through December, 2024.
