The Trump administration may influence annuity markets through reduced regulations, heightened competition, tax policy shifts and stronger market sentiment. Consumers should assess product terms carefully and adapt to potential changes, prioritizing principal protection and tax-efficient strategies.
The U.S. annuity market has shifted into higher gear, with sector sales up 29% from the third quarter of 2023 to the third quarter of 2024, according to LIMRA’s U.S. Individual Annuity Sales Survey. Fixed annuities alone gained 54% from the previous year’s results as investors flocked to the popular retirement income products.
LIMRA also noted that the annuity market has racked up 16 consecutive quarters of growth.
“The annuity market is on fire in 2024,” said Tom Buckingham, chief growth officer at Nassau Financial Group in Hartford, Connecticut. “Sales continue to grow quarter after quarter, which is great for consumers who value guaranteed returns and protection against outliving their assets.”
Buckingham noted that when he discusses annuity benefits with consumers, they typically show high interest. “I think that’s proven in the tremendous growth we’ve seen in the market over the past decade,” he said.
The question for the annuity industry is whether the good times will continue rolling when President Donald Trump is back in the White House.
Insurance experts contacted for this article cited several big annuity impactors with Trump in office. These factors are at the top of the list.
Regulatory Curbs Are In Play
The outlook is mixed with Trump and the Republican Party ascending in 2025.
“Above all, the administration seems focused on reducing regulatory burdens, which could benefit annuity providers by allowing more product innovation,” said Danny Ray, founder of PinnacleQuote Life Insurance Specialists in Jacksonville, Florida.
“However, a lack of clear consumer protections, such as those enforced by the [Consumer Financial Protection Bureau] in the past, could place more responsibility on buyers to fully understand what they’re purchasing,” Ray noted. “For example, changes to tax policies or retirement contribution rules could indirectly affect how annuities fit into financial plans, potentially creating opportunities or hurdles for both providers and consumers.”
Heightened Competition
Looking ahead, the administration’s impact on the market could hinge on regulatory adjustments that could light a fire under the already hot annuity market.
“Looser restrictions might lead to increased competition among providers, but it could also mean that consumers need to be more cautious,” Ray said. “For instance, annuity buyers should carefully evaluate product terms and fees, ensuring they align with long-term goals.”
Policy Implications
The Trump administration’s economic stance favors corporate growth, which can indirectly benefit annuity providers. “Policies such as extending the Tax Cuts and Jobs Act provisions could lower corporate taxes, enabling providers to enhance product offerings,” said Michael Schmied, a senior financial analyst at Kredite Schweiz, a financing and loan services provider.
Additionally, if corporate tax rates remain low, “companies could pass on some savings to consumers in the form of competitive pricing,” Schmied noted.
Sentiment Leans Toward Stronger Financial Market
Annuity consumers are more likely to engage with insurance companies when the stock market rises.
Some RIAs think that will be the case with Team Trump in office. An October survey by Security Benefit in partnership with Greenwald Research found that 57% of registered investment advisors said a Trump victory would cause stock values to rise.
Tax Paths for Annuity Activity
On the campaign trail and in recent media appearances, Trump called for eliminating taxes on Social Security benefits.
Up to 85% of Social Security benefits are taxable, depending on the recipient’s tax bracket and retirement age. If Team Trump can cut or curb those taxes, retirees would have more cash to pour into income-generating annuities.
Fiscal pressures tied to Social Security make cutting program taxes a risky proposition, however. The Congressional Budget Office projects that Social Security funds will be depleted by 2034.
There’s more on the topic from the Committee for a Responsible Federal Budget.
“We find President Trump’s campaign proposals would dramatically worsen Social Security’s finances,” the group said in a recent research note. It would “increase Social Security’s ten-year cash shortfall by $2.3 trillion through FY 2035” and “advance insolvency by three years, from FY 2034 to FY 2031 – hastening the next President’s insolvency timeline by one-third.”
Tips for Consumers
As the annuity sector aligns with regulatory and economic policies coming from the new administration and a Republican-controlled Congress, consumers will need to adjust their annuity experiences too.
“With potential shifts in tax policies under the Trump administration, having the ability to control when and how you access your funds can give you more leverage to manage your tax liability,” Schmied said. “This is especially important if future changes affect how annuity payouts are taxed — controlling your withdrawals lets you adjust to minimize impact.”
No matter who’s running the show in Washington, D.C., annuities will expand and offer more choices for consumers.
“One of the benefits is this is not a one-size-fits-all product,” Buckingham said. “There are many options to select from.”
Buckingham advised speaking with an insurance agent about your specific needs to help assess which type of annuity might be best.
“Ask about principal protection, growth potential and other benefits,” he said. “For those people looking for principal protection with growth potential, fixed index annuities offer great value in today’s interest rate environment, and many products offer optional benefits that guarantee income for life.”
Editor Norah Layne contributed to this article.