Fixed-rate annuities sales are projected to soar as high as 35 percent over the next five years, with variable annuities sales hitting 15 percent, according to new research from LIMRA Secure Retirement Institute (LIMRA SRI)

The group predicts that while both income-focused annuity product sales and accumulation-focused annuity product sales will grow in the next five years, accumulation-focused annuity product sales will grow at a much faster pace.

In fact, LIMRA SRI predicts that accumulation-focused annuity products will grow 30 percent to 35 percent by 2023. On the income-focused annuity side, products offering deferred income are predicted to grow 10 percent to 15 percent, while immediate income product sales are predicted to grow15 percent to 20 percent by 2023.

With more than 10,000 Americans, the demand for retirement income products will expand to nearly $32 trillion in annuities sales by 2026, LIMRA SRI estimates

Favorable interest rates, a volatile stock market and product development will all also be drivers of strong annuity sales, said Todd Giesing, LIMRA SRI’s head of security research.

“Last year was a bounce back year for annuities,” Giesing said. “We saw all annuities product lines experience growth. Variable annuities experienced growth for the first time in six years, but it really was fixed annuities that were the main driver of growth.”

In fact, total fixed annuities had a record-breaking year in 2018, up 27 percent to $133.5 billion, LIMRA found.

Clients clamoring for stable returns and income are motivating the universe of financial advisors—even fee-only advisors who have never used an annuity in their careers—to look hard at new products.

“My interest stems from the newer, non-commission products in the space,” said Mark Wilson, founder and president of Mile Wealth Management in Irvine, Calif. “When you strip the big commissions and high internal fees out of fixed-income annuities and variable annuities, they can be an attractive option for clients who want stability.”

Multiyear guaranteed annuities (MYGAs) currently offering a fixed 3.8 percent payout in return for a four-year lock in are of particular interest to Wilson. “They look like a four-year CD paying 3.8 percent. I can’t get that anywhere else,” he said.

Jon L. Ten Haagen, CEO and founder of Ten Haagen Financial Services in Huntington, NY, is also taking a hard look at how some of the newer annuities might fit into his clients’ portfolios after not selling an annuities product in years.

“The market is at a 10-year high,” Haagen said. “Markets are slowing down, clients are getting older. Putting some money into annuities gets their money away from market correlation and into something that is assured by an insurance company."

Retirees will continue to drive the annuities market, according to LIMRA SRI. Less than a third of boomers aged 60 and under have access to a pension.

However, the group found that while guaranteed retirement income solutions should be growing as pre-retirees begin to think about supplementing Social Security income, income-focused annuity product sales have remained lower than accumulation-focused annuity products.

LIMRA SRI research finds there was around $30 billion paid out in guaranteed income last year through annuities.

The real star in the industry continues to be indexed annuities, which went from representing just 10 percent of sales in 2007 to almost 30 percent in 2017, Giesing said.

“The products themselves have broadened their appeal in terms of retirement principal protection, offering the potential for higher returns than traditional fixed-income solutions, as well as optional guaranteed lifetime income solutions,” he said.

“When you look at whose buying annuities, a majority of them are individuals between the ages of 56 and 70. They’re looking for that downside protection, guaranteed income or a combination of both in their retirement portfolio," he added.