The "record" annuity sales of 2024 are likely to continue into 2025, according to Sri Reddy, senior vice president of Retirement Income Solutions at Principal Financial Group.
"Higher interest rates, volatile equity markets, and inflation — coupled with a growing aging population with longer life expectancies — mean Americans need more ways to save and invest to support their needs in retirement," Reddy told ThinkAdvisor in an email exchange.
Total annuity sales increased 30% year over year to $114.7 billion in the third quarter of 2024, according to LIMRA’s U.S. Individual Annuity Sales Survey, which represents 92% of the total market. In the first nine months of 2024, total annuity sales increased 23% to $332 billion, LIMRA reported.
ThinkAdvisor caught up with Reddy to talk about what's ahead for annuities in the New Year.
What's the outlook for annuities next year?
The growing demand for annuities is due in part to the aging U.S. population with more than 73 million Americans reaching age 65 or older by 2030. It's not just baby boomers that are thinking about how they can convert assets into lifetime income, either. Gen Xers and millennials are starting to shift their financial priorities by seeking more personalized strategies to help navigate a host of factors and complexities that would be unique to them.
On top of the aging population, there are a lot of market unknowns as we head into the new year.
Macro uncertainties including policies pertaining to taxes and trade are adding concerns to investing. Certain annuities, like a registered index-linked annuity, could be a great option to avoid anxiety and trying to time the market as they allow individuals to continue participating in equity markets while limiting some of the downside risk.
