US Annuities by the Numbers: A Market Overview

Annuity sales in the U.S. in 2022 totaled $310.6 billion, according to the Life Insurance Marketing and Research Association. That's a 22% increase from the 2021 sales of $254.9 billion. Sales for variable annuities were at $102.6 billion, while fixed-annuity sales numbers reached $208 billion. Previously, a look at annuity statistics shows that 2008 had the highest record at $265 billion. That's almost 17% lower than the new record set in 2022.

Annuities are financial products that guarantee a regular income for the rest of your life. They’re a popular option in retirement planning since they can replace the income you lose when you finally decide to stop working. You can receive payments immediately (as soon as a year after purchasing them) or after several years, allowing them to accumulate interest. Annuity contracts come in two types — fixed and variable — and knowing the difference between them can help you determine which one is a better product for you.

Annuity sales reached an all-time high of $310.6 billion in 2022. Looking at annuity statistics since 2019, you'll see that the trend has not always gone upward.

From total sales of $241.7 billion in 2019, the annuity market decreased to $219 billion the following year — a 9% decrease. The revenue from variable annuities in 2020 was 3% lower than 2019 figures, while fixed annuities sales decreased by 14%.

Overall annuity sales in the U.S. bounced back in 2021, climbing 16% from the end-of-year figures in 2020. SRI Annuity Research determined that the market had pent-up demand for investment options, and investors naturally gravitated towards products that offered protection and growth.

From then, sales grew by another 22% the following year. Comparing 2022 numbers to 2008, which previously held the record for the year with the highest annuity sales, 2022’s sales were 17% higher.

Sources: Preliminary U.S. Annuity Fourth Quarter 2022 Sales Estimates, Fourth Quarter 2020 U.S. Annuity Sales
(f) forecasted data based on preliminary Q4 data from LIMRA

Knowing how to spend your money smartly in retirement can go a long way toward keeping you financially comfortable. However, it's equally important to have a steady stream of income. Investing in fixed annuities is one option.

As their name implies, fixed annuities allow you to lock in an interest rate that remains constant over long periods. Although they offer investors less room for growth, they remain attractive because they involve minimal risk.

MoneyGeek's graph presents annuity statistics from 2019 to 2022 for fixed-rate deferred, indexed, deferred income, fixed immediate and structured settlements, all of which are fixed annuity contracts.

Sources: Preliminary U.S. Annuity Fourth Quarter 2022 Sales Estimates, Fourth Quarter 2020 U.S. Annuity Sales
(f) forecasted data based on preliminary Q4 data from LIMRA

Since 2022 was a record year for total annuity sales, it's unsurprising that fixed annuity sales also set a record. After dipping by $19.4 billion in 2020, fixed annuity numbers began climbing. From 2020 to 2021, revenue from fixed annuity contracts increased by $9.2 billion. However, figures grew by a whopping 60.57% ($78.4 billion) from 2021 to 2022. That's almost 49% higher than pre-pandemic numbers in 2019.

Among the various fixed annuity contracts, everything saw a decrease in sales in 2020 except fixed-rate deferred, which grew by almost 10%. In 2021, fixed-rate deferred and indexed contract sales began rising — by 1.92% and 14.77%, respectively — but we don't see this trend with the remaining contract types.

2022 saw an increase across the board and was a record year for fixed-rate deferred and fixed-indexed annuities. The former more than doubled from the previous year — an increase of 111%, to be exact.

There are various ways to ensure you have a source of income when you retire. Making strategic withdrawals from your 401k or Roth IRA is an option, but it isn't the only one. Investing in variable annuities is another — you'll have more freedom to choose among investment options. However, a variable annuity contract's value fluctuates depending on current market conditions, differentiating it from fixed annuities.

MoneyGeek provides data on several variable annuity contracts over the years. These include traditional variable and registered indexed-linked annuities.

Sources: Preliminary U.S. Annuity Fourth Quarter 2022 Sales Estimates, Fourth Quarter 2020 U.S. Annuity Sales
(f) forecasted data based on preliminary Q4 data from LIMRA

Even with total annuity sales reaching record-breaking figures in 2022, revenue from variable annuity contracts decreased by 18% from the previous year. You'll also notice a difference in sales patterns between the two types of variable annuity contracts.

Despite having a smaller revenue share, registered index-linked annuities (RILA) have been on an upward trend since 2019. Their most significant jump was in 2021, from $24.1 billion in sales to $38.7 billion — a 61% increase. Numbers continued to grow in 2022, and although it was only a 5.68% climb, it resulted in the highest sales for RILA to date at $40.9 billion.

Traditional variable annuities paint a different picture. Despite a 16% increase from 2020 to 2021, sales reduced by almost 29% the following year. LIMRA attributes the decline to economic conditions and competitive pressures. Since variable annuity contract values are subject to market fluctuations, investors may prefer fixed annuities that guarantee a return.

There's no shortage of sources where you can purchase annuities. However, annuities statistics show that individuals prefer some channels over others. The pie chart below details where you can procure an annuity contract and which have the most market share in 2021.

Source: Insurance Information Institute

Among the various sales channels available to buyers, the Insurance Information Institute found that 27% of all annuity contracts in 2021 were from independent broker-dealers. Besides working on your behalf to buy and sell securities, they can also offer financial advice, making them an attractive option for buyers who may not be comfortable handling their portfolios independently.

Independent agents are the second most-preferred channel, with 19% of the market. They represent insurance agencies rather than the policyholder. Banks and career agents share an equal share of the pie, with 17% each, while full-service national broker-dealers contribute 14%. Direct response sales only account for 4% of the market share.

You can’t study facts about annuities without looking at the various companies offering them. There is no lack of insurers carrying annuities as part of their roster of financial products. MoneyGeek listed the top-performing companies in the U.S. as of Q3 of 2022.

Source: U.S. Individual Annuity Sales

There's no lack of facts about annuities, but you can quickly become overwhelmed, especially if you're unfamiliar. Here are some questions buyers typically ask. These can shed some light on the annuities market in the U.S. and explain why they're a popular option for retirement.

Most people purchase annuities later in life, making them essential to retirement planning. However, retirement is a broad concept, and there are other areas to consider. Here are other online sources that may help you increase your level of retirement readiness.

• Annuities vs. Life Insurance: What the Difference and Which One Should You Get? Both financial products can be helpful for developing retirement readiness, but knowing the difference between them can help you decide which one better suits your long-term needs.
• How Much Do I Need to Save to Retire?: Ensuring you have enough savings when you retire is essential. Although the ideal amount is different for everyone, you can use several strategies to both determine and reach it.
• Basics of Traditional IRAs: Annuities and life insurance policies aren’t the only financial products you can consider when preparing for retirement — opening a traditional IRA is another.
• Planning for Financial Success and Happiness: Our financial needs vary at different stages of our lives. See some essential tips for seniors and older adults as they begin preparing for retirement.
• How to Make Rational Investing Choices During Stressful Times: There’s no denying the impact of the Coronavirus on the economy. If you have investments and are torn between continuing or pulling out your funds, MoneyGeek shares a list of items you should consider before deciding your best course of action.