2023 is currently on pace to be the biggest year for annuity sales ever, according to new data from the insurance research organization Limra. Through the first half of the year, annuity sales totaled $181.1 billion. This was a 27% jump from the first half of 2022, and set a record.
The second quarter of 2023 saw a slight decline compared to the first quarter, but overall sales continue to trend toward a massive year for annuities.
Following several years of large upticks in sales, continuing market conditions and changes in investor appetites, this trend may be here to stay.
Investment Strategies May Rise Due to Changes in Market Conditions
However, a larger shift in the way Americans look to save for retirement could be underway. The COVID-19 pandemic was a time of great volatility and risk that impacted millions of Americans’ retirement strategies. As people look for ways to ensure income in retirement and achieve peace of mind, annuities stand out as an appealing option.
A separate 2023 Limra study found that investors have been growing more conservative over the last couple of years, in part due to current market conditions. For years, annuities have been a favored product of such risk-averse individuals. The New York Times also found that an increasing number of people are using annuities in an attempt to replicate the impact of a pension.
When looking at the habits of investors by age, it’s easy to see how the trend toward conservative investing could be here to stay.
According to Morning Star, younger investors are investing more conservatively than their older counterparts. As that generation ages, safe and conservative strategies such as annuities may continue to shine as they look for ways to secure income in their later years.
All of these factors play a role in the rise of annual annuity sales.
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Annuity Sales Over the Years
While the first half of 2023 saw a massive uptick in annuity sales, it was far from the first time the annuity market saw tremendous growth.
According to Limra, total sales in 2022 hit $312.8 billion. That shattered the previous record of $265 billion set in 2008, eclipsing it by 18%. 2022 also saw a 23% sales increase over 2021.
Annuities have long been popular products, but that growth appears to have accelerated following the pandemic. According to the Insurance Information Institute, annuity sales in 2022 were nearly 30% higher than they were in 2019, the year before COVID-19 hit.
In fact, the only recent year that did not see growth in the annuity market was 2020 itself, when the pandemic started and sales fell 9.4% in the wake of the global economic crisis.
Annuity sales in 2023 have a strong chance of breaking the record that was set just last year.
Editor Bianca Dagostino contributed to this article.