Fixed index annuities for retirement: picking up steam, here to stay—and for good reason
Fixed index annuities (FIAs) have been gaining momentum for years. But why? Why the popularity, and how might one fit into your diversified retirement portfolio?
Annuity sales continue to climb. Total U.S. annuity sales increased to $464.1 billion for 2025, representing a 7% year-over-year increase1. And fixed index annuities are getting their fair share of that pie for good reason. Fixed index annuities provide a unique balance having the potential to benefit from market growth tied to an index, while offering protection of principal from direct market losses. Add to that tax-deferred* growth and options for guaranteed† lifetime income,‡ and you get a nice mix of both growth opportunities and retirement income that can help support long-term financial stability.
A brief history of the fixed index annuity
First introduced in the late 1990s as Equity Indexed Annuities, their onset represented an innovative new product allowing individuals to earn interest based on a stock market index, most without any principal risk. To remove the connotation of direct market participation, equity was removed a decade later and fixed index annuities were born.
Today, with boomers retiring in droves, the appeal of reduced market risk in exchange for guarantees is stronger than ever. And make no mistake, 2026 marks a considerable milestone for retiring Americans.
What is Peak 65, and what can it mean for millions of retirees?
Namely, Peak 65. What is Peak 65, you ask? It’s a term referencing the record 4.1 million Americans turning 65 each year through 2027.2 Yep, you heard that right. 4.1 million Americans!
In fact, we are essentially in the epicenter of Peak 65-ers right now, and with them those who are increasingly embracing fixed index annuities. And it makes perfect sense. After decades of investing for growth, remaining fully exposed to market volatility may feel increasingly uncomfortable, especially when retirement savings are intended to support income in the years ahead. That's one reason many retirees are exploring fixed index annuities as part of their retirement strategy.
As so many boomers turn 65, there’s a natural exodus away from wealth accumulation—and toward wealth protection. Whether retirement is at hand or just around the corner, the advantages of fixed index annuities shine ever brighter.
Why fixed index annuities continue to matter in 2026 and beyond
Interest and cost of living have shifted over the past several years, influencing everything from savings accounts to groceries, gas and more. Despite these fluctuations, the core purpose of a fixed index annuity continues to hinge upon providing principal protection linked to growth aligned with a market index.
Outliving income is a common retirement concern, and fixed index annuities offer tax-deferred growth and income options designed to provide lifetime payments. Keep in mind, they are not designed to maximize returns like a variable annuity, nor are they meant to replace traditional stocks. Simply, they offer market-linked growth designed to limit the risk of market losses. In strong years, their growth is capped, so you don’t capture every gain. But in declining years, your account value doesn’t fall either. Their sweet spot is controlled growth with principal protection.
Why yes, why no? The advantages and disadvantages of a fixed index annuity
Fixed index annuities can sometimes seem like a tale of two cities. On the one hand, an argument can be made that they are a safe alternative to direct market investing. On the other hand, some argue that the nuances and tradeoffs make them more complex than they're worth. Finding your comfort level in the middle ground may be the key.
Fixed index annuity retirement advantages:
- Principal protection: one clear benefit to a fixed index annuity is downside risk protection. They offer protection from market losses with growth potential connected to the market.
- Market linked growth: while FIAs protect against losses, they still allow you to earn interest based on market performance. When the index goes up, so can your account.
- Locked in gains: when your fixed index annuity earns interest, that gain is yours to keep.
- Tax deferral: like all annuities, fixed index annuities grow on a tax-deferred basis. That’s right, no taxes until you withdraw funds.
Fixed index annuity retirement shortcomings:
- Limited growth potential: because your market growth potential is capped, full Bull Markets are not realized on your bottom line. However, by design your downside is also protected.
- Liquidity and surrender restrictions: surrender periods are common, during which withdrawals might result in fees. Additionally, withdrawals before 59½ can incur IRS early withdrawal penalties.
Which annuity options should you consider for retirement payouts and income protection?
Jackson annuities are designed to provide protected, reliable income when you need it. Plus, you can choose from a variety of retirement payout options to assist with your unique wants and needs.
- Decide when you need retirement income: you can invest a lump sum and choose to start receiving payouts immediately or down the road.
- Customize your plan with unique options: discover how add-on benefits§ can guarantee income for life or help you leave a legacy.
- Choose a product that’s right for you: we offer a variety of annuity products that may be combined to fit your specific diversification needs.
Is a fixed index annuity right for you?
Well, if you are reading this article, that’s probably the million-dollar question. Fixed index annuities do offer a unique blend of principal protection and growth potential. For many, growth remains paramount. Locking in gains cannot be overlooked. However, as the pros and cons demonstrate, they do have limitations, such as return caps and liquidity. By partnering with a financial professional and understanding how fixed income annuities work, an FIA can have an invaluable place in your retirement portfolio.
Get in touch with your financial professional today to learn more about how the benefits of annuities from Jackson can help you diversify** your retirement portfolio and create a lasting wealth strategy. Learn about becoming debt-free before retirement, the average income in retirement, and how an annuity from Jackson might provide income protection that you can count on.