Investment Strategies May Rise Due to Changes in
Market Conditions
LIMRA suggested that the continuing growth of
annuity sales may be attributable to both market forces and favorable interest
rates, and conditions do suggest it is a favorable time to buy an annuity.
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.
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.
Source
https://www.annuity.org/2023/09/23/annuity-sales-record-breaking-2023/
