LIMRA notes that 4.1 million Americans are turning 65 every year \u2014 what they call \u201cPeak 65.\u201d A lot of those folks don\u2019t have pensions, and they\u2019re scrambling to manufacture one before they retire.<\/p>\n
Demand isn\u2019t slowing down anytime soon.<\/p>\n
Quick gut-check \u2014 if your money advice is coming from random online influencers, you\u2019re playing a dangerous game. I\u2019ve been a CPA since 1980 and writing about money since before the internet existed. Sign up for the free Money Talks Newsletter<\/a> and get expert advice that\u2019s been tested by time.<\/p>\n 4. The window probably won\u2019t stay open<\/p>\n Here\u2019s the catch, and it\u2019s a big one.<\/p>\n The Fed has been holding rates higher to fight inflation, which the Bureau of Labor Statistics pegged at 3.8% annually as of April, thanks largely to our conflict with Iran. But markets are already pricing in cuts.<\/p>\n When the Fed cuts, bond yields drop. When bond yields drop, so do annuity payouts.<\/p>\n LIMRA itself is forecasting weaker fixed annuity sales in 2026 as rates ease.<\/p>\n This isn\u2019t the first time the math has tilted in retirees\u2019 favor \u2014 I flagged a similar window back in 2022<\/a>. The difference now? The case is stronger, and the runway is shorter.<\/p>\n If you\u2019ve been waffling on this for two years, your window of generous payouts may be measured in months, not years.<\/p>\n 5. Inflation eats fixed payments alive<\/p>\n Now for the bad news. The same inflation that\u2019s juicing today\u2019s payouts is also the biggest enemy of every annuity buyer.<\/p>\n If you lock in $3,000 a month at age 65, that\u2019s $3,000 a month forever \u2014 even if a gallon of milk costs $15 in 20 years. At 3.8% inflation, your purchasing power gets cut roughly in half in less than 20 years.<\/p>\n Some annuities offer cost-of-living riders, but they slash your starting payment by 30% to 50%. That\u2019s a brutal trade.<\/p>\n The way I think about it: An annuity is one piece of your retirement income strategy, not all of it. Pair it with investments that grow \u2014 and look at other ways to guarantee yourself steady income<\/a> while you\u2019re at it.<\/p>\n 6. The fine print can ruin you<\/p>\n Here\u2019s where most people get burned. Annuities are sold, not bought \u2014 and the people selling them earn fat commissions. That creates a powerful incentive to push you into the wrong product.<\/p>\n Stick with single-premium immediate annuities or boring multiyear guaranteed annuities. Avoid the variable, indexed, and \u201cincome rider\u201d contraptions designed to confuse you and pay the salesperson 7% or more.<\/p>\n Also, an annuity is only as safe as the insurance company behind it. State guaranty associations typically cover $250,000 to $500,000 per person per insurer. If you\u2019re buying more than that, split it among two or three A-rated companies.<\/p>\n And please \u2014 get quotes from at least three different insurers before you sign anything.<\/p>\n 7. A good place to start<\/p>\n We\u2019ve had good luck recommending . They help you understand which types make sense for your age and exactly how much monthly income you can expect.<\/p>\n If you are 50 or older, you can lock in a permanent paycheck today. You cannot outlive it, and Wall Street cannot take it away.<\/p>\n