How Annuities Protect You from Market Volatility

Hi there, Stan The Annuity Man, America’s Annuity Agent, licensed in all 50 states. Today’s topic is a big one: annuities versus market volatility. I was told not to yell, but this one gets me fired up. Let’s break it down and talk about what annuities can and cannot do for you when markets get bumpy.

My Market Background

Before becoming “Stan The Annuity Man,” I worked on Wall Street. Dean Witter (which became Morgan Stanley), Paine Webber (which became UBS)—I was there, suited up in double-breasted jackets, walking through marble offices. I understand markets, volatility, and what it’s like chasing returns.

That’s why I created my mantra: “You own an annuity for what it will do, not what it might do.” Annuities are contracts, pure and simple. They provide contractual guarantees, not market fantasies.

Do You Really Need an Annuity?

Full disclosure: I sell Fixed Annuities. That includes MYGAs, Indexed Annuities, SPIAs, DIAs, and QLACs, which are products that offer contractual guarantees. If you’re moving toward retirement, chances are you’re looking to reduce exposure to market volatility.

Currently, approximately 13,000 people turn 65 every day. Many of them are shifting part of their portfolios from unpredictable market swings into guaranteed products. Annuities solve for four primary goals:

• Principal Protection
• Income for Life
• Legacy
• Long-Term Care/Confinement Care

I call that the PILL framework. If you need to solve for one or more of those items, annuities might make sense.

But let’s be clear, you don’t need to put all your money in annuities. I’m often the first to tell people, “You don’t need one.” If you’ve got a good handle on the markets and enjoy the ride, that’s great. But for those who want stability, annuities can complement your investments.

Income Floor + Market Flexibility

Here’s how it works: build your income floor. That means securing guaranteed income through Social Security (the best inflation annuity on the planet), pensions if you’re lucky enough to have one, and annuities if you need more.

With that floor in place, you can leave the rest of your portfolio in the markets without worrying about volatility wrecking your retirement income. You don’t need to cash out investments during downturns because your basic income is already covered.

Don’t Fall for Too-Good-to-Be-True Pitches

Here’s where I get fired up: some sales pitches claim you can get market returns with full principal protection. That’s a lie. If it sounds too good to be true, it is every single time.

Most of the time, these claims are tied to Fixed Indexed Annuities. These are CD-type products introduced in 1995 to provide returns similar to those of CDs. That’s it. They were never designed to track the market or deliver stock-like gains.

But what do you hear at the bad chicken dinner seminars? “Market upside with no downside!” Please don’t fall for it. Indexed Annuities can be fine products, but they’re not investments. They’re contracts. If you want true guarantees, buy the will do (contractual guarantees), not the might do projections.

A Smarter Way to Use Annuities

For principal protection and guaranteed yields, look at MYGAs (Multi-Year Guarantee Annuities). They function like CDs but often provide better yields, with interest that can compound tax-deferred or be withdrawn annually.

For guaranteed lifetime income, products like SPIAs, DIAs, and QLACs let you transfer the risk to the insurance company and secure payments for life. Combine those with Social Security, and you create peace of mind—no matter how volatile the market gets.

Final Word

Annuities aren’t magic. They don’t replace the markets, and they’re not designed to. But they can balance your retirement plan, protect principal, and give you an income stream you can’t outlive.

So, the next time you worry about market swings, remember annuities provide stability, not speculation. Combine them wisely with your investments, and you’ll be in a better position to weather volatility.

That’s me, Stan The Annuity Man, America’s Annuity Agent. Thanks for reading, and I’ll see you in the next blog.