The annuity industry is having a moment. After years of mixed opinions and confusion around how they work, annuities surged in popularity in recent years, with total U.S. sales reaching a record-high $434.1 billion in 2024—a 13% increase from 2023.
This trend has continued through 2025, fueled by a wave of aging Americans seeking stability in an uncertain economic environment. Let’s explore the specific factors contributing to this sustained interest, the challenges still facing the industry, and what the future may hold for annuities as a modern retirement tool.
MARKET GROWTH & TRENDS
The American annuity market has experienced a resurgence in recent years. From 2022 to 2024, total U.S. annuity sales exceeded $1.1 trillion, marking three straight years of record-breaking growth.6 In 2024 alone, annuity sales reached $434.1 billion—a 13% year-over-year increase—according to the LIMRA U.S. Individual Sales Survey, which covers 92% of the market.
Although 2025 may see a modest pullback, the industry outlook remains strong. LIMRA projects annuity sales between $364–$410 billion this year, with the dip largely tied to declining short-term interest rates. The organization expects sales to stabilize in the following years, with forecasts of $340–$398 billion in 2026 and $326–$395 billion in 2027.
One of the primary factors behind this is America’s aging population. Between 2023 and 2027, the number of Americans aged 65 and older is projected to increase by 7.5 million. LIMRA expects that demographic shift—combined with increased sales from fixed-rate deferred annuities exiting their contingent deferred sales charge (CDSC) periods—to drive demand.
MARKET VOLATILITY
Persistent market swings have made many retirees and near-retirees uneasy about relying too heavily on stocks. In 2022, the S&P 500 fell 19.4%—its worst annual performance since 2008.9 That downturn marked an inflection point, as many investors began turning to annuities for a more stable and predictable source of retirement income.
Fast forward to 2025, and the volatility hasn’t subsided. Global trade tensions, fueled by fear over the Trump administration’s tariff proposals, continue to rattle the markets. A series of sharp selloffs in early 2025, including a 748-point single-day drop in the Dow Jones Industrial Average (DJIA), have only deepened investor anxiety.
RAISING INTEREST RATES
Interest rates rose rapidly from 2022 through 2023. The Federal Reserve raised the federal funds target rate from near zero to a range of 5.25% to 5.50%, where it remained until September 2024. While rates have since dipped slightly, the target rate still sits at a range of 4.25% to 4.5%—well above the historically low levels of the 2010s.
This rate environment has enabled insurers to offer higher yields on fixed annuities, increasing their appeal. For example, annuity rates in the Thrift Savings Plan (TSP) climbed from 1.95% in January 2022 to 5.2% by December 2023. As of June 2025, they remain elevated at 4.825%.