Why so many people are putting money into annuities today

 1. 

Guaranteed Income in Retirement

Many are drawn to lifetime income guarantees that annuities offer, especially as pensions disappear and Social Security may not cover all retirement needs. With an annuity, you can convert part of your savings into a predictable income stream.

 2. 

Stock Market Volatility

In uncertain markets, fixed or indexed annuities provide downside protection:

• Fixed annuities guarantee a set return.
• Indexed annuities offer upside potential tied to a market index (e.g., S&P 500) but with a floor, so you don’t lose principal during downturns.

 3. 

Higher Interest Rates = Better Annuity Payouts

As of 2024–2025, interest rates are relatively high. That’s good for annuities:

• Immediate annuities and fixed annuities are offering more attractive payouts than in past low-rate environments.
• People are locking in these higher rates now, fearing future declines.

 4. 

Tax Deferral

Annuities grow tax-deferred, so you don’t pay taxes on interest or gains until you withdraw. For high-income earners who’ve maxed out 401(k)s or IRAs, annuities can be an additional tax-efficient savings vehicle.

 5. 

Diversification from Traditional Portfolios

Annuities add a non-correlated asset class to portfolios. Many retirees use them to reduce sequence-of-returns risk (the danger of withdrawing during market dips) by using annuity income instead of selling volatile assets.

 6. 

Behavioral and Emotional Benefits

People value peace of mind and predictability:

• Knowing bills are covered by a stable income stream helps people feel more secure.
• It reduces the pressure to micromanage investments later in life.

 7. 

Legacy and Estate Planning

Some annuities offer death benefits, helping pass money to heirs without going through probate, or providing long-term care riders to protect against medical expenses later in life.

If you’re considering one, it’s important to:

• Understand the type of annuity (fixed, variable, indexed, immediate, deferred).
• Watch for fees, surrender charges, and liquidity restrictions.
• Align it with your overall financial plan and risk tolerance.