Annuities can become a portfolio ‘stabilizer’

When geopolitical tensions rise, markets react quickly. The conflict involving Iran has pushed oil prices higher and injected fresh volatility into global markets as investors try to gauge the economic fallout.

For American households, those swings are not just headlines. They show up directly in retirement accounts, college savings plans and long-term portfolios. And when markets become unstable, investors often ask a simple question: Is my financial future secure?

This question feels especially timely as June marks National Annuity Awareness Month, a time dedicated to helping Americans better understand one of the most effective tools for creating stability in uncertain times.

During periods like this, one solution that frequently enters the conversation is the annuity.

It’s important to remind clients that at its core, an annuity is designed to provide a predictable stream of income, often guaranteed for life. While markets may rise and fall due to geopolitical developments or economic shocks, certain annuity structures are designed so income payments continue regardless of market conditions.

And more Americans are relying on that stability than ever before. According to the American Council of Life Insurers, life insurers paid out $104 billion in annuity benefits in 2023, the highest amount on record and a 9% increase over 2022. While annuity payments increased, so did the amount of money workers and retirees put into annuities for long-term savings. Premiums paid by annuity owners in 2023 totaled $361 billion, a nearly 3% increase over 2022. 

These figures represent real people and real families who depend on annuity income to support their retirement, regardless of what’s happening in global markets.

Annuities are sometimes misunderstood, not because they don’t work, but because they are often compared to traditional investments that were never designed to provide the same features. In reality, annuities address four key risks that many portfolios struggle to solve on their own. Here’s what I tell my clients.

Longevity risk: Americans are living longer than ever, and retirement can last 20, 30 or even 40 years. Many annuity structures provide income that lasts for life, helping ensure retirees do not outlive their resources.

Inflation risk: Over time, rising costs erode purchasing power. Some annuity designs allow income to increase over time or incorporate features that help retirees keep pace with inflation.

Overspending risk: Market downturns combined with high withdrawals can quickly damage a portfolio. Guaranteed income streams can help cover essential expenses, reducing the pressure to sell investments during difficult markets.

Volatility risk: This is the very issue dominating headlines today. Many annuity riders allow income benefits to grow or accumulate even when the underlying investments fluctuate with the market. That structure can help protect future income streams from short-term market turbulence.

For many investors, that combination can make annuities a stabilizing element within a broader financial strategy.

That does not mean annuities are appropriate for every situation. Some involve long-term commitments and product features that investors should fully understand. But when integrated thoughtfully into a financial road map, they can help investors balance growth opportunities with protection and income stability.

Education plays an important role in helping Americans make informed financial decisions. That mission is central to NAIFA and to Life Happens, our consumer education community. Life Happens provides accessible resources that help families understand financial protection strategies such as life insurance, disability insurance, long-term care planning and annuities so they can make informed choices about protecting what matters most.

Global conflicts will come and go. Markets will react, and sometimes overreact, to geopolitical events. But the real goal of a sound financial strategy isn’t predicting the next crisis. It’s building income that can survive one. 

Christopher Gandy, founder and CEO of The Legacy Wealth Group, has been elected President of the National Association of Insurance and Financial Advisors for the 2026 term. Contact him at [email protected].