By Marc Gilman
(800) 927-9326 |
Key Takeaways
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U.S. annuity sales hit $464.1 billion in 2025, the fourth consecutive record year, and 2026 is on pace to stay above $450 billion — the second quarter alone was the best quarter LIMRA has ever tracked.
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Three forces are driving the surge: interest rates staying higher for longer than expected, 2026 market volatility pushing savers toward products with downside protection, and a demographic wave of roughly 4.1 million Americans turning 65 every year through 2027, many without a pension.
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The headline number hides real differences by product. Income-focused annuities (SPIAs, RILAs) grew sharply in early 2026, while fixed-rate deferred annuities and fixed index annuities actually declined, as buyers shifted preferences based on the rate and market environment.
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A record sales year is a statement about millions of other people’s decisions, not evidence that an annuity fits your specific plan. The only way to know is to model your own numbers with and without one.
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Since most annuities are sold through commission-based agents, it’s worth asking directly how your agent or advisor is paid and what standard they’re held to — regulations now require every annuity recommendation to meet a “best interest” standard, a real step up from the older “suitability” standard.
Why Are Annuity Sales at a Record High?
Annuity payout rates track prevailing interest rates, and rates have stayed higher for longer than most buyers expected after the rate hikes of recent years. That lets insurers offer more monthly income for the same lump sum than they could a few years ago.
Two other forces are adding to the surge. Market volatility in 2026 pushed a number of savers toward products that offer protected growth alongside guaranteed income, after watching their account balances swing sharply. And the retirement system is absorbing what the industry calls “Peak 65” — more than 4.1 million Americans turning 65 every year through 2027, a group that increasingly lacks a pension or other guaranteed income source to cover basic expenses. LIMRA’s own research points to this demographic wave as the largest single driver of demand.
Does the Record Number Mean Every Annuity Type Is Selling Well?
No — and this is where the headline number can mislead. The first quarter of 2026 broke down very differently by product type. Single premium immediate annuities and registered index-linked annuities (RILAs) both grew more than 20%, and deferred income annuities grew modestly. Meanwhile, fixed index annuities declined about 4%, and fixed-rate deferred annuities dropped roughly 12%.
That split tells a real story: buyers moving toward RILAs were often choosing more upside potential in a strong stock market over the more conservative protection a standard fixed index annuity offers — both products protect principal to some degree, but only one caps how much of a market gain you actually keep. Knowing which specific product type a “record year” headline is actually describing matters, since it may have little to do with the type of annuity that fits your own situation.
Is an Annuity Actually Right for Your Plan?
For most buyers, an annuity works as one layer in a broader income stack that also includes Social Security, portfolio withdrawals, and — for a shrinking number of retirees — a pension. An annuity that duplicates income you’d already receive from Social Security or a pension costs you flexibility without adding real protection. One that’s too small to matter just adds cost without solving the problem it was meant to solve.
The real question isn’t whether 2026 was a strong sales year — it’s whether your own retirement plan holds up better with a specific annuity in it or without one. That comes down to modeling your actual numbers, not applying an industry average to your situation.
What Costs Are Easy to Miss?
Every annuity purchase deserves the same scrutiny as any other five- or six-figure financial decision, regardless of how strong the industry’s sales numbers look in a given year:
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Surrender charges typically run 5% to 10% in the first several years if you withdraw money early, stepping down over time — your money is genuinely locked up for a stretch.
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Rider fees pay for guarantees on variable and indexed products, and you pay them whether or not you ever use what they guarantee.
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Tax treatment matters more than people expect. Growth inside a non-qualified annuity is tax-deferred, but withdrawals of the earnings portion are taxed as ordinary income — often a higher rate than the long-term capital gains rate that would apply to the same growth in a taxable brokerage account.
Where Does Insurance Planning Fit In?
Most annuities reach buyers through a commission-based agent, which is built into the product and paid by the insurer — it’s not automatically a conflict, but it’s worth understanding. Every annuity recommendation is now required to meet a “best interest” standard under NAIC model regulation (or an equivalent rule in New York), a real step up from the older “suitability” standard, which only required a recommendation to be generally appropriate. Variable annuities and RILAs, as registered securities, add a second layer of protection through the SEC’s Regulation Best Interest when sold by a broker-dealer representative. Asking directly how an agent or advisor is paid, and what standard governs their recommendation, is a fair question to ask before committing to any specific product — the answer doesn’t tell you whether the recommendation is right for you, but it tells you what’s shaping it.
What To Do Next
If you’re wondering whether the current environment makes sense for adding an annuity to your plan — or want to understand what a specific product would actually mean for your income and estate plans — Gilman Agency can walk through the numbers with you rather than pointing to an industry average.
Call us at (800) 927-9326 or email to schedule a review.
Sources: Scott Staton, “Annuity Sales Hit a Record High in 2026. Is One Right for You?” Boldin (August 2026); LIMRA, “2025 U.S. Retail Annuity Sales Set New Sales High Totaling $464.1 Billion”; National Association of Insurance Commissioners, Annuity Suitability and Best Interest Standard model regulation; U.S. Securities and Exchange Commission, Regulation Best Interest.
