In the ever-evolving landscape of financial services products, the annuity remains a beacon of stability and adaptability for investors. The success of 2023 underscored this resilience, with annuity sales soaring to a record-breaking $385 billion, marking a 23% increase from the previous year’s peak. This surge was predominantly fueled by the growth in fixed annuities, which totaled $164.9 billion, up by a substantial 46% from 2022, which can be attributed to the high-interest rate environment and increased interest in higher yielding, less volatile investments. Looking forward to 2024, we believe the industry will continue to be robust, as investors increasingly recognize annuities may be a reliable investment vehicle for the long run due to offering options for guaranteed income and solutions for all risk levels.
Annuities Cater to a Range of Financial Goals
There are a number of annuity products that can cater to a range of investors’ financial goals. For example, fixed annuities may be an attractive option for investors looking for a higher guaranteed rate of return. Alternatively, for investors seeking higher long-term returns but who aren’t comfortable being fully exposed to market volatility, Registered Index-Linked Annuities (RILAs) may be appealing. RILAs can help investors get comfortable with the market again due to their ability to provide a measure of protection on the downside while also presenting higher growth potential.
RILAs capture both the upside potential and the downside protection with the use of buffer and floor features. A RILA floor is the maximum loss you will experience during a down market. A RILA buffer is the loss that the annuity issuer will absorb in a down market, and you will experience any loss beyond the buffer. In exchange for taking some downside risk, you are rewarded with more upside potential than what would generally be available through a no-risk investment. By allocating between floors and buffers or between different levels of floors and buffers, investors are able to customize their risk exposure and upside potential, making them a great addition to any portfolio.
Is An Annuity Right For You?
Annuity Sales in 2024
As we delve into the landscape of annuity sales in 2024, we anticipate continued expansion for good reason. Despite the challenges investors are facing with ever-evolving market dynamics, projections suggest a positive outlook for annuity sales. As individuals increasingly seek reliable income streams and financial security in retirement, annuity products remain trusted allies, helping to offer stability and peace of mind amidst economic uncertainty.
The views expressed here are those of the author and do not necessarily represent the views of TruStage.
TruStageTM Annuities are issued by CMFG Life Insurance Company (CMFG Life) and MEMBERS Life Insurance Company (MEMBERS Life) and distributed by its affiliate, CUNA Brokerage Services, Inc., member FINRA/SIPC, a registered broker/dealer, 2000 Heritage Way, Waverly, IA, 50677. Investment and insurance products are not federally insured, may involve investment risk, may lose value and are not obligations of or guaranteed by any depository or lending institution. All contracts and forms may vary by state and may not be available in all states or through all broker/dealers.
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