Annuity Market: Looking Beyond Headline Sales

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Author

Matthew Drinkwater, Ph.D., FSRI, FLMI, AFSI, PCS
Corporate Vice President, Annuity and Retirement Income Research
LIMRA and LOMA

July 2026

For the past several years, rising annuity sales have been widely viewed as evidence of a healthy and expanding market. By conventional measures, the momentum has been impressive. LIMRA’s benchmarking indicates new deferred annuity sales climbed from $192 billion in 2019 to $405 billion in 2025, while annual statement data indicate the number of new deferred contracts issued rose from 1.7 million to 2.6 million over the same period. Yet a deeper look at the underlying indicators suggests a more complicated story: strong sales do not necessarily mean the market itself is broadening.

In fact, several core measures point to limited expansion in the annuity customer base. According to annual statement data, the total number of deferred individual annuity contracts in force was 29.9 million in 2019 and 29.4 million in 2025, essentially flat and slightly down over the period. Household ownership has shown a similar pattern, hovering in a narrow band and slipping from 17% to 14% by 2025 among households in LIMRA’s target population (workers and retirees, aged 40 to 85, with at least $100,000 in household investable assets). At the same time, assets have continued to rise, reaching $4.26 trillion in 2025, which suggests that growth has been driven less by broad customer acquisition and more by larger average contract values, ongoing replacement activity, and favorable market performance.

This distinction matters. If growth is being sustained primarily by asset appreciation and within-industry flows rather than by attracting new households, the industry may be overstating the durability of its expansion. Some product segments have clearly gained traction — especially fixed indexed annuities and registered index-linked annuities — and some carriers have posted meaningful gains in contract counts. But those gains have largely offset declines elsewhere rather than creating broad market growth. The implication for carriers is clear: Sales momentum and sustainable expansion are not the same thing.

Lessons From Other Industries

The annuity market is not the first industry to confront this type of disconnect. The traditional life insurance business offers a useful comparison. For decades, insurers generated substantial revenue through career-agent distribution even as household ownership gradually eroded. Revenue remained strong because premiums per buyer increased and sales became more concentrated among middle- and upper-income households. But beneath the surface, the customer base was aging and narrowing, and the industry struggled to build new channels capable of reaching younger consumers after agent field forces declined. The annuity market may be facing a comparable challenge, particularly given the overlap in the professionals who sell both life insurance and annuities.

Other industries have seen similar patterns. Travel agencies, for example, appeared stable for years as suppliers relied on commission-driven distribution, only to discover that younger and more price-sensitive consumers were increasingly moving toward self-directed channels. Once distribution economics changed, the underlying weakness of the traditional model became visible.

Growing the Market

So where should carriers focus if the goal is durable customer expansion? One important opportunity is the IRA rollover market. According to LIMRA research, deferred annuities captured only 6% of dollars rolled out of workplace retirement plans in 2025, even though rollovers represent one of the largest potential pools of “new money” available to the industry. Investors in their 60s were especially likely to roll assets into annuities, and households with $500,000 to $1 million in investable assets were particularly inclined toward deferred annuities. Carriers can better align products, messaging, and distribution support with rollover decisions when retirement assets are in motion.

Carriers should also sharpen their focus on the middle- and mass-affluent market. While wealth concentration has increased, households with $100,000 to $499,999 in investable assets still represent a large share of the addressable market and, in the aggregate, a chance for meaningful long-term growth. These households are less likely than wealthier investors to have pension income, less likely to be able to rely on Social Security alone, and less likely to work with a financial professional. That combination makes them both more vulnerable to retirement income shortfalls and more likely to be underserved by today’s market structure. For carriers, winning in this segment will require scale, simplicity and value propositions that address practical retirement concerns rather than product features alone.

Within that market, Generation X deserves particular attention. Households headed by adults aged 46 to 61 by the end of 2026 are entering a critical phase for retirement planning, yet many remain underprepared. According to LIMRA research, half of middle- and mass-affluent Gen X households do not regularly work with a financial professional, only 15% have a formal written retirement plan, and fewer than 4 in 10 expect guaranteed lifetime income to cover their basic living expenses in retirement. Many are also balancing competing financial obligations as members of the “sandwich generation.” Helping this cohort convert retirement uncertainty into concrete planning action could be one of the industry’s most important growth opportunities over the next decade.

Finally, carriers can prioritize ease of purchase. The data suggest that once consumers own annuities, they are relatively likely to remain in the category, even if they exchange contracts. The larger obstacle is persuading first-time buyers across the threshold. Simplifying products, streamlining sales processes, reducing operational friction for financial professionals, and using newer technologies — including generative AI — to make education and decision support more accessible could all improve conversion. Carriers that make annuities easier to understand and easier to implement will be better positioned to reach younger and first-time investors as their financial lives grow more complex.

Conclusion

The industry’s recent sales performance is real and significant. But if carriers want that momentum to translate into lasting growth, they will need to look beyond headline results. The strategic imperative is not simply to generate more premium. It is to expand the number of households for whom annuities play a meaningful role in retirement security. Durable growth will come not from higher sales alone, but from broader ownership, new customer acquisition, and a more deliberate effort to meet the needs of tomorrow’s retirees.

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