2025 Annuity Overview

Fixed Index Annuities (FIAs) and Multi-Year Guaranteed Annuities (MYGAs) are retirement products with unique benefits. FIAs provide growth potential linked to market indices while protecting your principal, making them ideal for those seeking moderate returns with market downside protection. They often include optional features like guaranteed lifetime income riders.

MYGAs, on the other hand, offer a fixed, guaranteed interest rate for a set term, similar to CDs but with tax-deferred growth and typically higher returns. While FIAs suit those seeking long-term growth with flexibility, MYGAs are a better option for conservative investors wanting predictable returns over shorter periods. Both options can complement a comprehensive retirement strategy.

2025 Outlook

1. Impact of Interest Rates: Interest rates significantly influence Annuity payouts.
   •  Rising Interest Rates: Higher rates could result in improved payouts for fixed Annuities, as insurance companies can generate higher returns on their investments.
   •  Low or Stable Interest Rates: In a low-rate environment, payouts for fixed Annuities might be less competitive, but their appeal as a safe and predictable retirement option remains strong. Other types of Annuities, such as indexed Annuities, may attract attention for their potential to offer higher returns with some market participation.
2. New Annuity Products: We may see more creative Annuity options that offer added benefits, such as long-term care coverage, to meet different retirement needs.
3. Tax Considerations: Annuities offer the advantage of taxdeferred
   growth, making them attractive for retirement planning. However, potential changes to tax laws could alter their appeal.
   •  Increased incentives for using Annuities as part of qualified retirement plans (e.g., 401(k)s).
   •  Potential adjustments to tax rates on distributions or limits
   on tax benefits could impact future buyers.
4. Annuities in Comprehensive Retirement Planning: Annuities are increasingly seen as one component of a diversified retirement strategy. They can complement other income sources, including Social Security, pensions, and personal savings, providing stability and reducing reliance on volatile market-based assets.

The Impact of Legislation

Recent legislation, including provisions from the SECURE Act 2.0, aims to simplify and encourage the inclusion of Annuities in employer-sponsored retirement plans. Key changes expected in 2025 include:

• Easier Access to Annuities in 401(k) Plans: The new bill
  reduces regulatory barriers, making it simpler for employers to offer Annuities as part of their retirement plan menus.
• Portability of Annuities: Workers can now transfer Annuities
  purchased in one employer’s plan to another plan or IRA,
  ensuring continued access to guaranteed income as they change jobs.
• Increased Default Options: Employers may begin incorporating Annuities as default options in 401(k) plans, helping workers transition from savings accumulation to income generation seamlessly.
• Education and Transparency: The legislation mandates clearer communication about the role, costs, and benefits of Annuities within retirement plans.

These changes could lead to greater adoption of Annuities, making lifetime income strategies more accessible to millions of Americans, particularly those who lack financial expertise to seek out such products independently.

Conclusion:

Annuities can be a useful tool for retirement, providing stable income. In 2025, their popularity will depend on factors like interest rates, market conditions, and tax laws. Understanding how Annuities work and how they fit into your overall retirement plan is important for long-term financial security.