More than 11,200 Americans are turning 65 every single day, and that demographic tidal wave is reshaping the life insurance industry in real time. LIMRA, the industry’s leading research organization, projects annuity sales will set another record in 2026, reaching somewhere between $438 billion and $485 billion. Life insurance, by contrast, is expected to grow at a modest 2% to 4%. The divergence tells a clear story: Americans nearing retirement are prioritizing guaranteed income over death benefits, and the industry is scrambling to meet them where they are.
The phenomenon has a name: Peak 65. The tail end of the baby boomer generation is hitting the traditional retirement age in numbers not seen before, with more than 4.1 million Americans reaching 65 each year through 2027. What makes this cohort different from earlier retirees is what they lack. When the Peak 65 generation entered the workforce in 1980, about 60% of private sector workers had access to traditional pensions. By 2020, that figure had fallen to just 4%. The result is a generation approaching retirement with 401(k) balances and Social Security, but no guaranteed monthly check from a former employer.
That gap is driving annuity demand. Fixed-rate and fixed-index products have led the surge, with registered index-linked annuities gaining particular traction. LIMRA projects RILA sales will exceed $75 billion in both 2025 and 2026, up from $24 billion just five years ago. The products appeal to investors seeking downside protection without giving up all upside potential, and the high interest rate environment of recent years has made their terms more attractive. Even as rates begin to ease, the underlying demand for guaranteed income remains.
The shift is also showing up inside workplace retirement plans. The SECURE 2.0 Act, passed in 2022, expanded how annuities can be incorporated into 401(k) and 403(b) plans, and adoption is accelerating. In September 2025, the Department of Labor classified AllianceBernstein’s Lifetime Income Strategy as a qualified default investment alternative, a decision that could spur broader adoption. LIMRA data shows nearly 95% of workers believe income options should be available within their employer-sponsored plans.
Life insurance, meanwhile, is entering a quieter phase. Consumer interest remains above prepandemic levels, but the dramatic uptick seen during COVID has leveled off. LIMRA’s Bryan Hodgens noted that traditional triggers for life insurance purchases, including marriage, children, and home buying, are happening later and less frequently. Birth rates are down, and younger generations are delaying major life milestones. The over-60 market, once a growth engine, has been saturated after decades of sales. Carriers are increasingly focused on final expense products and accumulation-oriented policies like indexed universal life to find growth. For consumers still evaluating their options, understanding the life insurance cost breakdown by age and policy type remains essential.
The financial picture for Peak 65 retirees is troubling. Research from the Alliance for Lifetime Income found that two-thirds of this cohort are not financially prepared for retirement. Median retirement savings sit at $269,000 for men and $185,000 for women. The disparities widen by race and education: whites have median savings of $299,000, compared to $123,000 for Hispanics and $49,000 for Blacks. College graduates have median savings of $591,000, while those with only a high school diploma have $75,000. For those who did not finish high school, the median is $7,000.
These numbers explain why so many retirees are asking advisors the same question: How do I make sure I never run out? The mindset has shifted from maximizing returns to eliminating worst-case scenarios. Annuities, when used correctly, address that fear in a way mutual funds cannot. They promise income for life, regardless of how long you live or what markets do. The tradeoff is liquidity and control, but for retirees without pensions, that tradeoff increasingly makes sense.
Industry fundamentals remain strong. S&P Global Ratings expects North American life insurers to maintain robust credit profiles in 2026, with roughly 95% carrying ratings of A- or higher. Capitalization is solid, profitability has improved since the pandemic, and balance sheets can withstand economic stress. Fitch Ratings maintains a neutral sector outlook, citing strong asset-liability management and liquidity despite macroeconomic uncertainty. New York Life recently announced it will pay $2.78 billion in dividends to participating policyholders this year, the largest payout in its 180-year history. For those comparing carriers, researching the best life insurance options based on financial strength ratings and product features can help narrow the field.
Technology is also changing how products are sold. AI-driven underwriting is moving from pilot programs to production, particularly in medical risk assessment and claims processing. Accelerated underwriting programs, which allow applicants to skip medical exams, continue to expand, with some carriers now approving face amounts as high as $5 million without bloodwork. The goal is faster, simpler purchases that meet consumers where they are, especially younger buyers accustomed to digital-first experiences.
The millennial question looms in the background. LIMRA notes that the U.S. is simultaneously experiencing a “peak millennial moment,” with that generation now the largest in the country. The retirement challenges facing today’s Peak 65 cohort will likely be magnified for those following 30 years behind. Without policy changes or shifts in savings behavior, the retirement income gap could widen further.
For now, the industry is responding to what it can see: millions of Americans reaching 65 with meaningful balances but no pension, looking for ways to turn savings into income that will last. Annuity sales reflect that demand. Life insurance, still essential for families with dependents, continues to serve a different purpose. The two products are not in competition; they address different stages of financial life. But the market is telling us which stage is demanding attention right now, and the answer is clear. Peak 65 is here, and the industry is pivoting to meet it.
