From Time:

Sales of annuities are surging as Americans look to lock in high interest rates for retirement. Fixed-rate deferred annuity sales have more than tripled in the last two years, reaching $164.9 billion in 2023. With rates currently around 4-5%, annuities are behaving similarly to CDs and are a popular tool for retirement planning.

The surge in annuity sales began in late 2022 and early 2023, driven by rising interest rates and high inflation. Annuity companies invested in bonds and other securities, providing higher returns than banks. Currently, the Fed is indicating that rate cuts are on the horizon, spurring more people to buy annuities while current rates are still available.

It’s not just fixed-rate deferred annuities that are hot: fixed indexed annuities and registered index-linked annuities are also selling at record levels. These products are common tools for retirement planning and are more attractive in a high-interest rate environment. It is important to note, however, that not everyone should invest in annuities and alternative retirement savings options may offer greater flexibility or higher returns. However, for many, annuities are being seen as a complementary plan to ensure a comfortable retirement.

While there’s been talk about the negative impact of high interest rates on consumers, there has also been the emergence of unique opportunities in fixed income to set yourself up for the future. Annuities are seen as a way to provide similar peace of mind that a pension used to for many Americans and gives people courage to be more aggressive on the rest of their savings.



Read more: Why More Americans Are Buying Annuities for Retirement