Why Fixed Annuities Make Sense in a High Interest Rate Environment

With interest rates rising steadily since 2022, fixed annuity rates are more attractive than they’ve been in decades, with some products currently offering rates as high as 6.8%. For those looking to create dependable income in retirement, this presents a rare opportunity to lock in a high rate of return with long-term guarantees.



Fixed annuities provide something few other financial products can match: guaranteed income for life. This kind of protection can help you guard against one of the most significant financial risks retirees face — the possibility of outliving your savings.

The Retirement Income Gap

For many Americans, that concern is very real:

• Only 31% of Americans have any kind of guaranteed pension outside of Social Security.
  
• 80% worry that their retirement savings won’t be enough to live on.
  
• 60% don’t expect their income will last their lifetime.
   

And they may have good reason to worry. According to the Social Security Administration, there’s a 50% chance that at least one spouse in a 60-year-old married couple will live to age 91. That’s a long time for savings to stretch — especially in a volatile market or high inflation environment.

What Fixed Annuities Can Do for You

When used strategically, annuities can add strength and predictability to your retirement plan. Here’s how:

Guarantee a Baseline Income

Fixed annuities are ideal for covering non-discretionary expenses like housing, food, Medicare premiums, and insurance. Knowing these essentials are covered with guaranteed income can bring lasting peace of mind — regardless of what the market does.

Protect Against Market Volatility

Having a stable stream of annuity income means you’re less likely to panic when markets dip. You won’t need to sell investments at a loss to meet monthly expenses, helping you avoid what’s known as sequence-of-returns risk — a major threat to retirement portfolios. Your annuity income keeps coming in, month after month, no matter what’s happening on Wall Street.

According to the Alliance for Lifetime Income, 65% of people who have protected retirement income believe their financial security will last their lifetime.

Customizing Your Annuity for More Protection

Annuities aren’t one-size-fits-all. Depending on your needs, they can be structured to include features like:

• Cost-of-living adjustments (COLAs) – to help your income keep pace with inflation.
  
• Return of premium at death – ensuring your loved ones receive your unused principal.
  
• Joint and survivor income – providing guaranteed payments to a spouse after your death.
  
• Guaranteed minimum income benefit (GMIB) – securing a minimum level of income, even if the annuity’s investments underperform (typically available with variable annuities).
   

Are Fixed Annuities Right for You?

You might benefit from a fixed annuity if:

• You’re concerned about stock market risk.
  
• You want to guarantee income for life, especially if you don’t have a pension.
  
• You’re in good health and expect a long retirement.
  
• You want to provide income for a surviving spouse. 
• You’re in a high tax bracket and want tax-deferred growth.

The Takeaway

If you're exploring annuities in 2025, now may be an excellent time to act while interest rates remain favorable. But as with any financial product, it’s important to compare features, rates, fees, and benefits—and to understand how the annuity fits into your overall retirement strategy.

We're here to help you review your options, answer your questions, and find the right annuity solution for your goals and lifestyle. Whether you’re looking to buy now or weighing the timing, let’s talk through your best next step.