2024 is coming to a close, the first full year in our new era of Peak 65. There are now 11,200 Americans per day reaching age 65, up from 10,000 per day in prior years. That means more than 4.1 million Americans will turn 65 each year through 2027.
This rapidly growing cohort of Americans is concerned that their savings will not last through retirement. And many are turning to annuities, the sole financial product in the private marketplace that can guarantee lifetime income.
Total U.S. annuity sales reached a record-high $385.4 billion in 2023, a 23% increase year over year, according to LIMRA’s U.S. Individual Annuity Sales Survey. And sales this year are on pace to shatter that record.
But it is not just sales. Life insurers are delivering record-breaking annuity benefit payments. According to ACLI’s 2024 Fact Book, life insurers paid out $104 billion in annuity benefits in 2023. That is the most money ever paid out, a 9% increase year over year.
Now, important new ACLI-supported research provides even more evidence to buttress the value of annuities.
A study by economists Mark Warshawsky and Gaobo Pang reveals that a strategic and tailored approach featuring annuities coupled with regular withdrawals will lead to optimal retirement results.
“The retirement landscape has undergone significant transformations in recent years with the traditional reliance on defined benefit plans shifting towards defined contribution plans and individual retirement accounts,” said Warshawsky. “These plans lack built-in means for a retiree to know how to best structure their regular withdrawals to fund their lives in retirement, and annuities fill that gap.”
The study confirmed that annuities provide retirees with a stable flow of income, while easing the burden on their remaining retirement balance and still accommodating ongoing principal growth. This research shows that people retiring with $250,000 or less would most benefit from annuitizing higher portions of their retirement savings, if not all of it.
America’s life insurers remain committed to working with policymakers to ensure that all Americans have access to the annuity products they need to provide their families with a secure financial future.
Andrew Remo serves as Vice President, Retirement Security for the American Council of Life Insurers. In this capacity, he plays a leading role in advocating for policies that help people access the tools they need to save and ensure those savings last a lifetime. Previously, Andrew worked on these issues for the American Retirement Association and on Capitol Hill.
