At a glance
- Strong equity growth, client concern about recession and underperformance in fixed income have complicated the more stable role bonds traditionally played in client portfolios, Goldberg said.
- Goldberg said low rates weakened the annuity value proposition for years, and that higher rates have allowed insurers to offer more attractive crediting rates, upside potential and protection features.
- Goldberg sorted the market into four categories that combine return potential and protection differently.
Retail annuity sales climbed from $254.6 billion in 2021 to a record $464.1 billion in 2025, according to LIMRA figures cited in a Wealth Solutions Report interview with Pacific Life's Steve Goldberg. That is an 82% increase over four years.
Strong equity growth, client concern about recession and underperformance in fixed income have complicated the more stable role bonds traditionally played in client portfolios, Goldberg said. Some advisors, he said, are replacing part of their bond allocations with annuities, using the contracts for growth potential with downside protection rather than only for guaranteed lifetime income.
Goldberg said low rates weakened the annuity value proposition for years, and that higher rates have allowed insurers to offer more attractive crediting rates, upside potential and protection features. "My take is that the demographics have always been there," he said, pointing to the millions of Americans entering retirement each year as a market that existed well before the recent sales surge.
Four structures, four trade-offs
Goldberg sorted the market into four categories that combine return potential and protection differently. Traditional fixed-rate deferred annuities carry a stated interest rate and are the most conservative of the group. Fixed index annuities link interest to an index and protect against losses when that index falls over an applicable term. Registered index-linked annuities, or RILAs, offer greater upside potential than fixed index contracts in exchange for accepting some market risk. Variable annuities carry the least protection.
Goldberg described a 20% buffer: the contract would absorb the first 20 percentage points of a market loss over the specified term, leaving the investor exposed to everything beyond that level. Buffer size and term length set how much of a decline the client keeps.
The sales increase from 2021 to 2025 was $209.5 billion. How large a share of a client's bond sleeve an annuity should replace depends on the buffer, the term and the retiree's other income sources.
Reported by the Products & portfolios desk from Wealth Solutions Report. Published . Corrections