Rethinking Retirement: Why Annuities Are Critical to Your Portfolio

by William Jones / ⠀Investments / July 9, 2025

The path to retirement used to be simple: save and invest strategically and consistently over time to yield predictable returns. However, today’s economy is exerting new pressures on that traditional route. Between rising inflation, a weakening dollar, a more volatile stock market, and the persistent expectation of recession, more middle-aged workers are reconsidering their road to retirement. Annuities offer a way forward for those wondering how to bring a sense of stability to their financial planning.

Why Savings Are No Longer Enough

The quick spikes and unexpected downturns in the stock market have eroded the savings of many soon-to-be retirees. However, this market volatility has done more than just that; it has also created a sense of discomfort or unease when thinking about one’s financial future. At the same time, advances in medical technology and projected longevity increases raise questions about whether one’s savings might run out before one’s life span does. This uncertainty has led some people to look for alternatives to the dollar, like gold or Bitcoin. Others look for financial instruments that can buffer a retirement fund against market fluctuations. In either case, people are looking for answers to the same question: How do you ensure you will have a reliable and consistent income for your retirement?

Where Annuities Come In

The promise of predictable income has made annuities more attractive, and many now treat annuities as a key part of a balanced retirement portfolio. There are at least three reasons for this.

1. Predictable Retirement Income

Where mutual funds and stocks are vulnerable (to varying degrees) to market volatility, annuities are effectively insurance contracts, offering a fixed certainty of future payments. Annuities provide peace of mind for those watching their more traditional investments falter.

2. Dealing with the Risk of Longevity

Annuities make retirement income fixed and predictable and help allay longevity’s financial risks. Because annuities are structured for lifetime income, guaranteeing payments for the remainder of the annuitant’s years, investing in them removes the worry of potentially outliving your means. After all, you want to relax and enjoy your retirement, not suffer the anxiety that your money may not see you through it.

3. Capital Preservation

Certain annuities preserve capital besides hedging against market volatility and mitigating longevity risk. With an uncertain market and rising inflation, those saving for retirement must take steps to protect their principal in the event of a recession or other adverse economic events. Fixed annuities and fixed indexed annuities offer this kind of security against market losses; they are designed to ensure that the money you originally invested remains secure, even if the market reduces your capital gains.

Balancing Growth and Security

Given those three reasons and the recent state of the economy, investor sentiment has been shifting. More investors, especially those in the second half of their careers, are placing more importance on protecting the stability of their retirement funds. These investors turn to annuities because they need financial instruments that provide reliable post-retirement income with limited risk. Ty Young, CEO of Ty J. Young Wealth Management, a firm known for its expertise in annuities, has been watching this trend closely. Young suggests, “In today’s uncertain market, investors rightly prioritize growth and protection. A well-structured annuity can be the key to achieving both, offering the potential for growth while safeguarding against market downturns.” While annuities can allow investors to balance growth and security, they are often complex and intricate and vary in the instruments and features they may include. That is why firms like Ty J. Young Wealth Management exist, offering professional guidance as investors consider the options carefully. Decisions made now can have long-lasting effects, so it is crucial to understand how different annuities are structured, how their fees work, and what benefits each type of annuity brings.

What to Consider When Choosing an Annuity

“The essential elements of a good annuity are straightforward: transparency, security, and reasonable returns,” Ty Young recommends. “Look for products with minimal or no fees, guarantees on your principal, and a clear, understandable rate of return.” Simplicity and transparency are essential. Look for annuities with clear terms and conditions, and consider avoiding financial instruments with hidden fees or extremely complex structures, as these can make it more difficult to predict the real value of that instrument over time. Ty Young’s suggestion about checking for guarantees on your principal is also critical; in a faltering economy, you will want to protect the money you are putting in. When thinking about “reasonable returns,” realize that annuities do not offer the same high growth potential that some conventional investments do. The point here is to secure stable and predictable income. Therefore, annuities are unlikely to constitute your entire retirement portfolio. Still, it may be worth considering whether to devote more of your portfolio to them than you have thought about in the past. As part of a well-diversified portfolio, annuities can buffer against market instability and help you achieve your retirement goals more predictably and steadily. Go well-informed and get professional advice to choose the best annuity for your plans.