Why annuities are in demand
Last updated January 23, 2026
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Once you retire full-time from your career, the paychecks stop, but an annuity can offer a way to still get a steady stream of guaranteed income after you are done working. And consumer interest in annuities has never been higher. Since 2022, annuities have repeatedly set new sales records year after year.1
A variety of factors are contributing to the surge in demand, from economic conditions to a shift in how consumers are financing their retirements. But before we get too in-depth, what are annuities, and why do people want them?
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What is an annuity?
An annuity is a contract between you and an insurance company that states the company will send you regular payments (income) in return for your premium (money you used to buy the annuity). The time you begin receiving income depends on the type of annuity and the time period you select.
One of the simplest annuity models is our modern-day Social Security system. You contribute money via employment taxes during your working years and, in turn, receive inflation-adjusted monthly payments for life after you retire.2
Retirement products for uncertain times
A chief reason for surging annuity sales is the roller-coaster US economy of the past few years. It’s no surprise that the last annuity sales record was set in response to the global financial crisis of 2008, which put the US economy into an economic free-fall and led to the loss of $17 trillion in household wealth.3,4
Today, people are facing economic uncertainty, fears about Social Security funding, and worries about their retirement. According to our research, Americans’ top three financial stressors are related to retirement with nearly half of Americans saying they worry about having a source of guaranteed income in retirement.5 Given this, it’s no surprise more people are turning to annuities.
Stability amidst a changing retirement landscape
The traditional definition of retirement is changing as life expectancy increases, people work longer, and retirement income sources change. Traditional defined benefit pension plans used to be commonplace. At retirement, an employee received a lifetime annuity from their employer, typically based on years of service and final salary. But since 1980 the number of people with pensions has decreased by 60%, replaced by 401(k) plans funded by employee contributions.6 Money in a 401(k) plan can grow tax-free or tax-deferred depending on the plan, but contributions are limited by IRS rules.7,8
Annuities can be a good complement to a 401(k) plan for your retirement strategy because they offer more income distribution choices and are not subject to IRS contribution limits. You may be able to put as much money as you like into an annuity (subject to the insurer’s rules) and be assured of a guaranteed income stream during your retirement years. Based on your contract, you're able to determine the length of time during which you'll receive payments (e.g., for your lifetime or a specific number of years).
A major consideration with certain annuities is the lack of liquidity or on-going access to your premium. You may surrender an annuity at any time, but, depending on the contract, a surrender charge may be applied. Some annuities may also require an annual fee or fees for optional contract features.
With the shift from traditional pension plans to 401(k)s, annuities may offer a way to replicate that dependable income stream associated with pensions. This feature can help reassure people seeking financial stability amidst a changing retirement landscape.
Improved financial confidence
Perhaps the benefits of annuities lie in the financial confidence they can provide the policyholder. Retirees say their top two financial regrets are not saving enough and not starting to save sooner for retirement.9 But 78% of people who own an annuity say they’re on track with their retirement savings.10 And study after study has found that retirees with guaranteed income from annuities enjoy greater happiness, less stress, and even longer lives.11,12,13
Annuities can be a key retirement planning tool, but choosing the right type of policy and customizing it to your needs is a complex undertaking. Consult with a financial professional to explore your annuity options and be sure to work with an insurance company that is financially stable.