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Denzel Rodriguez explains why annuity sales hit their highest level since the Great Depression. With 30-year Treasury yields driving payouts, he argues this is the best time in 30 years to lock in guaranteed retirement income before rates fall.
Denzel Rodriguez explains why annuity sales hit their highest level since the Great Depression. With 30-year Treasury yields driving payouts, he argues this is the best time in 30 years to lock in guaranteed retirement income before rates fall.
What's interesting, we haven't seen this many people buy annuities since right after the Great Depression. You can just buy an annuity and it's going to ensure that you won't run out of money in retirement. And that's why people are flocking to them. You know, if you're approaching retirement within the next 10 years and you're looking at securing a portion of your portfolio with guarantees, this is literally the best time in the last 30 years to do it. Because if they cut those rates, that will lower that example I gave you earlier, it'll lower the payouts of annuity.
Okay, so the distribution rate comes down based off of whatever the rates are, and that's based off the federal funds rate, or is that based off prime?
The fed funds rate drives everything, but then they really goes off of the bond market. So annuities are basically looking at, you know, the 30 year bond. And that's what insurance companies are able to purchase to be able to back these annuities up. And so they're looking at the bond market. So as those interest rates fall, the payouts that the insurance company can offer through the annuity fall as well.
