Right now, Americans have more than $6 trillion sitting on the sidelines in cash — more than double the 30-year average.¹ That's understandable after years of market swings, inflation spikes, and economic uncertainty. Sitting on the sidelines feels safer, but safety alone won’t get you where you want to go. While cash protects your principal, it doesn’t grow your future.
That's where annuities can help. Fixed and fixed indexed annuities (FIAs) offer a powerful middle ground: a way to protect your principal, generate guaranteed income, and grow your money, all without the full exposure of the stock market.
The Hidden Costs of Playing It Safe
Traditional cash accounts, like a certificate of deposit (CD), savings account, or money market fund offer a sense of control, but they come with trade-offs:
- Inflation erosion: If inflation is 3% and your savings earn 1%, your purchasing power shrinks.
- Missed opportunity: Over time, cash can underperform inflation and cost you more in lost growth.
- Tax drag: The little interest you do earn is typically taxable.
- Behavioral risk: Staying in cash too long often means missing the market’s recovery.
These aren't just hypothetical risks. The reality is today’s retirees are feeling the income squeeze. According to LIMRA, a trusted resource organization focused on the financial services industry, only 63% to 73% of retirees say their guaranteed income covers their basic living expenses — and that number has barely budged over the last 12 years.
A Balanced Way Forward
If you’re not comfortable riding out market swings — and you’re not happy watching your cash sit idle — there’s a better path.
Fixed and fixed indexed annuities can help you:
- Lock in steady, predictable returns
- Protect your principal
- Benefit from tax-deferred growth
- Create guaranteed income for life
Fixed annuities work like CDs, but with additional tax advantages. You earn a guaranteed interest rate over a set number of years — and gains grow tax-deferred until you withdraw the money.
Fixed indexed annuities add a performance edge. They’re linked to a stock market index (like the S&P 500), giving you the chance to earn more during good years, while still protecting you from losses in bad ones. Some offer caps as high as 12%, with a worst-case annual return of 0%.
A Practical Scenario
A 60-year-old with $500,000 in retirement savings may feel uneasy about the market. Moving $100,000 into a fixed annuity earning 5% would generate $5,000/year in tax-deferred income — guaranteed, no matter how the markets perform.
That’s a reliable income base that preserves peace of mind and frees up other assets to keep growing.
Retirement Has Changed
We often think of retirement as a finish line, but that’s no longer the norm. According to a recent study by LIMRA:
- Only 47% of retirees stopped working as planned. Many retired earlier — either because they became eligible for benefits or simply wanted to enjoy life.
- 71% of retirees left the workforce all at once, while a smaller portion phased into retirement by gradually reducing their hours.
- About 1 in 9 retirees now work by choice — not necessity — to stay active, engaged, and to afford extras.
- In fact, 65% say they work for discretionary spending, 63% for physical activity, and 61% to stay mentally sharp.
All of this points to a new kind of retirement — more flexible, more fluid, and more lifestyle-driven. That’s exactly why income planning matters. You need to cover your essentials reliably, so you can enjoy the freedom to work, travel, or relax on your own terms.
Lifetime Income Is the Missing Piece
Here’s where annuities shine: they offer the guaranteed income most retirement plans lack.
With traditional pensions declining (just 48% of retirees received pension income in 2023, down from 66% a decade ago2), annuities can act as a personal pension — providing regular, reliable payments for life. Whether you annuitize or use an income rider, these payments continue even if your account value runs out.
Some contracts even include long term care features or joint options for couples.
A Tool That Fits Today’s Goals
Investors today are balancing multiple priorities. LIMRA found that:
- 54% want lifetime income
- 54% want to keep growing their savings
- 44% are focused on protecting principal
Fixed and fixed indexed annuities can help accomplish all three — making them a versatile part of a broader retirement strategy.
And while annuity income dropped from 2002 to 2020, it’s rising again. About 1 in 5 retirees received annuity income in 20242, signaling renewed interest as market uncertainty and pension gaps increase.
The Bottom Line
Saving for retirement isn’t just about how much you accumulate. It’s about how much you can rely on — year after year, no matter what the market does.
If you’re sitting on cash, waiting for the “right time” to get in the game, consider this: the right time might be now. Safety doesn’t have to mean sitting still. With fixed and fixed indexed annuities, you can protect your money, create dependable income, and move forward with confidence.
You don’t need to overhaul your entire plan to benefit. Many people start with a portion of their savings — just enough to build a stable income base or move idle cash into a tax-deferred solution.
Everyone’s retirement journey is different. Talk with your financial professional to explore whether an annuity is the right step for you. A simple conversation could lead to greater clarity, confidence, and control over your financial future.
Contributors
Alissa Hufford is the Director of the Crump Annuity Solution Center. She has been with Crump for 25 years, and during her tenure, she has learned about all facets of the annuity industry by working in almost every area of the Crump Annuity Solution Center. Today, Alissa leads a team of about 20 annuity sales desk associates and internal wholesalers. Together, they are a valued resource to financial professionals and clients learning how to fit annuities into their overall financial plan. Alissa holds her Series 6 license.