Why Annuity Purchases Are Heating Up This Summer
With the warm weather starting to feel real in June, the popularity of annuities continues to rise with the inflation rate challenging consumers’ retirement choices in other safe products like bonds. The market continues to fluctuate with the economy as riskier selections (market-based investments, cryptocurrency, etc.) feel the effects.
Why are annuities so popular right now? According to the Secure Retirement Institute, total annuity sales increased 4% to $63.6 billion in its first-quarter U.S. individual annuity sales survey. The reason involves rising interest rates and increased market volatility shifted the product mix this quarter, with fixed annuity products driving the overall growth.
“Both FIAs and fixed-rate deferred products benefited from the significant interest rate increases in the first quarter,” said Todd Giesing, assistant vice president, SRI annuity research. “Coupled with a nearly 5% equity market decline, investors sought out principal protection and steady growth, which these products offer.”
Total fixed annuity sales were $35.2 billion, up 14% over first quarter 2021. Double-digit growth for fixed indexed annuities and fixed-rate deferred annuities drove the overall fixed annuity sales to pre-pandemic levels.
Annuity Alliance also would like you to understand the correlation between interest rates and annuities. Typically, higher interest rates tend to increase yields on annuities. Consumers also may purchase annuities when a downturn in the stock market occurs (or the onset of a “bear” market), because annuities do not go down in price when interest rates rise. Annuities are viewed as a safer retirement planning vehicle as these products can provide guaranteed lifetime income.
Do you have questions about annuities? Are you looking for someone to review your retirement planning strategies? Do you know about your options? Contact Annuity Alliance if you have questions or would like a financial professional in your local area to contact you.