Annuities are having a moment. In fact, each of the past three years has seen a new record for total annuity sales, reaching a total of $432.4 billion in 2024 (up 12% from 2023 which held the old sales record).
The reason behind the popularity? Investors are seeking reliable income streams and protection from market volatility.
This renewed interest isn't merely a trend. It represents a fundamental shift in how high-net-worth individuals approach retirement and legacy planning. Beyond the headlines, the popularity of annuities is telling a story: a story of security, legacy, and thoughtful planning.
Let’s take a deeper look at this hot planning tool.
Understanding the Annuity Renaissance
The appeal of annuities lies in their unique ability to provide guaranteed income streams while offering tax advantages that are particularly valuable for high-net-worth investors. In an era of increasing longevity and market uncertainty, these features have become increasingly attractive to those seeking to secure their financial future or provide for others. Annuities can offer a solution to various pressing planning challenges including:
The Longevity Crisis: With Americans living longer than ever, even substantial wealth can erode. How devastating would it be to outlive your hard-earned savings in your final years?
The Tax Time Bomb: Market gains bring hefty tax burdens. Without proper planning, taxes can devour up to 40% of your wealth. Imagine watching nearly half your legacy vanish to unnecessary taxation.
Market Volatility Exposure: In today's uncertain economy, a single market downturn can devastate decades of wealth building. Can your portfolio weather another 2008 or 2020 crash as you near retirement?
For many, annuities provide the answer to these challenges. They transform assets into a reliable income stream that can outlive market swings and changing economies.
And we aren’t talking about your parent’s annuities. Today's annuity products are more sophisticated and flexible than their predecessors, offering features like inflation protection, death benefits, and various investment options. For family offices and registered investment advisors, these products represent valuable tools in comprehensive wealth management strategies.
How Annuities Shape Financial Plans
For affluent clients, annuities aren’t just investments, they’re solutions. While annuities are often associated with personal retirement planning, they can also serve as powerful vehicles for legacy creation. They offer unique advantages in estate planning, allowing wealthy individuals to provide for family members or others who have made significant contributions to their lives.
Ways that annuities can support wealth strategies include:
Guaranteed Income for Generations: Transform your wealth into an unshakeable income stream that powers your lifestyle and protects your loved ones…no matter how long you live or what the markets do.
Tax-Advantaged Growth Engine: Watch your wealth multiply through the power of tax-deferred compound growth, creating a legacy that's protected from unnecessary taxation and wealth-eroding fees.
Bulletproof Legacy Transfer: Seamlessly pass wealth to the next generation while completely sidestepping the costs, delays, and public exposure of probate, ensuring your legacy reaches your loved ones exactly as you intended.
Market-Proof Protection: Sleep soundly knowing your wealth is armored against market crashes and economic uncertainty, while others watch their portfolios ride the volatile waves of Wall Street.
Precision-Engineered Flexibility: Design your perfect financial future with customizable features that adapt to life's changes, from inflation protection to long-term care coverage, ensuring your plan evolves as your needs do.
The Future of Annuities
As tax laws evolve and market uncertainty persists, the strategic use of annuities in high-net-worth planning will likely continue to expand. Their ability to provide tax efficiency, guaranteed income, and wealth transfer options makes them valuable tools in sophisticated financial planning.
For high-net-worth investors, annuities should not be viewed in isolation but as part of a comprehensive wealth management strategy. They can be particularly effective when coordinated with other planning vehicles such as trusts, life insurance, and investment portfolios. The key is understanding how these products can be optimized within the context of an individual's overall financial objectives.
At Robin Glen, we work closely with family offices and RIAs to create customized solutions that align with their clients' unique needs and objectives.
A Legacy of Gratitude: Annuities in Action
For thirty years, Margaret Chen served as personal assistant to renowned concert pianist Victoria Sterling. From organizing world tours to managing household affairs at Victoria's Manhattan penthouse, Margaret became more than an employee, she was family. The problem? Victoria, now in her seventies, worried about Margaret's future. That's when her long-time financial advisor, Robert, reached out to our team at Robin Glen for guidance on creating a lasting legacy for Margaret.
Working together with Robert, our team discovered $2 million in investment assets that could be repositioned to provide lifetime income for Margaret. We developed a strategy to use these funds to acquire an annuity that would activate upon Victoria's passing.
The strategy provided:
Guaranteed lifetime income for Margaret, ensuring her financial security throughout retirement.
The tax-efficient transfer of benefits maximized the value of Victoria's gift.
Protection from market volatility gave both Victoria and Margaret peace of mind.
Built-in flexibility allowed for Margaret's changing needs over time.
When Victoria passed away peacefully in her sleep, Margaret discovered this final gift from her longtime employer and friend. The annuity provided her with steady monthly income, allowing her to retire comfortably and pursue her own interests after decades of dedicated service. Victoria's thoughtful planning meant Margaret could maintain her lifestyle without financial worry.
Expert Guidance from Robin Glen
At Robin Glen, we specialize in helping family offices and RIAs create annuity strategies tailored for HNW and UHNW clients. Whether the goal is lifetime income, tax efficiency, or legacy creation, we design solutions that align with personal values and financial goals.
The record-breaking demand for annuities reflects their growing importance. Now is the time to explore how they can enhance your clients' estate and legacy strategies.
Ready to begin? Contact us today to schedule a consultation.