As retirees seek reliable income streams, investors are turning to alternatives like fixed annuities and dividend-focused ETFs, with key products such as ANN, VYM, and JNK gaining traction. These instruments offer predictable returns in uncertain markets.
- Social Security is expected to cover just 40% of average retirees’ income by 2035.
- Deferred income annuities (DIAs) can provide $2,500–$4,000/month for a $100,000 premium.
- VYM has a 3.8% yield and $105 billion in assets, with $2 billion in net inflows over 12 months.
- JNK yields 7.1% and saw over $2 billion in net inflows over the past year.
- Annuity sales rose 12% year-over-year in 2025, driven by demand for guaranteed lifetime income.
- Investors are combining annuities with income ETFs to balance predictability and liquidity.
With Social Security projected to cover only about 40% of average retirees’ pre-retirement income by 2035, financial planners are increasingly recommending supplemental guaranteed income solutions. Fixed annuities, particularly deferred income annuities (DIAs), have emerged as a core tool, offering guaranteed monthly payments starting as early as age 65, with some contracts providing lifetime payouts of $2,500 to $4,000 per month for a $100,000 premium, depending on age and gender. ETFs focused on dividend income and high yield are also playing a growing role. The Vanguard High Dividend Yield ETF (VYM), with a 3.8% yield and $105 billion in assets, provides consistent quarterly distributions, while the iShares iBoxx High Yield Corporate Bond ETF (JNK) offers a 7.1% yield, appealing to investors seeking income despite higher credit risk. These funds allow retirees to maintain liquidity while generating steady cash flow. The demand for guaranteed income has driven a 12% year-over-year increase in annuity sales through the first three quarters of 2025, according to industry data, with companies like Prudential and MetLife reporting stronger-than-expected DIA inflows. Meanwhile, VYM and JNK have each seen over $2 billion in net inflows in the last 12 months, reflecting investor preference for income-generating assets with moderate volatility. This shift underscores a broader trend: retirees are no longer relying solely on government benefits. Instead, they are building diversified income portfolios using insurance products and ETFs to hedge against longevity risk and inflation, particularly in a macro environment with elevated interest rates and uncertain market conditions.