Foreign Conflicts, Inflation, AI: How Will Annuities Fare?

Written by Ariel Stern Updated March 25, 2026

There are a lot of things to be worried about right now: the conflict in Iran, lingering inflation, the disruptive impact of AI on the global economy. These are all very real issues that are confronting our nation and causing uncertainty.

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While each of these issues carries its own very serious non-financial impacts, they also affect the global and U.S. economy.

To be perfectly clear, we do not take lightly the seriousness of these issues. However, if you are near or in retirement, these uncertainties can cause very real anxiety about your finances. And it’s not selfish to feel anxious about your finances in the face of such global uncertainty.

People have been calling us asking if buying an annuity right now is a good idea in the face of everything that’s going on. While we can’t predict the future, we can help you understand if an annuity can offer you financial peace-of-mind or be something you might later regret.

Stressed About Stock Market Volatility?

If you are partially invested in the stock market right now, you probably know that the past month has seen a significant downturn. You may be wondering if annuity rates are also going down.

Annuity rates have remained resilient and even increased slightly over the past month. The reason for this is that annuity rates are correlated with long-term bond rates, not the stock market.

Fidelity has predicted a continued strong bond market through 2026 (though before the Iran conflict), and more recently, BlackRock also anticipates seeing bond yields rise. This could mean increases in annuity rates along with long-term bond rates, if they perform as predicted.

On top of this, there are concerns that AI is creating a bubble in the markets. This is of concern because tech companies make up a large share of many U.S. markets, such as the S&P where tech represents 36% of the market.

This means that even "balanced" index funds may be more tech-heavy and less diversified than you realize, putting you at increased risk from a market slide in the tech sector.

Viewed in this way, a tech crash or market slides from complications from the Iranian conflict are creating additional risk to the stock market. If investors leave the stock market for the safety of bonds, increased demand could actually drive bond yields (and annuity rates) back down. This could make waiting for a better rate actually backfire.

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Should You Be Locking In Annuity Rates if You’re Worried About Inflation?

Many people are worried about inflation, and rightly so. It can have a real effect on your buying power and quality of life.

The current geopolitical conflict threatens to increase inflationary pressure, while the AI boom is causing a dramatic increase in utility prices (gas and electric) due to its power usage. These utility price increases impact necessities not easily done without.

So while you should be aware of inflation and preparing for it, also don’t put yourself in a position where a market downturn can ravage your retirement finances.

Reducing Inflation Risk With Annuities

There are some conservative options for managing inflation, such as I Bonds, Treasury Inflation-Protected Securities, and annuities.

While annuities may not immediately come to mind as inflation protection vehicles, there are a few strategies designed to combat inflation and provide guaranteed income:

  • Annuity Ladder: An annuity ladder spreads out multiple smaller purchases over time. This protects against interest rate risk while also increasing your income throughout the ladder period.
  • Cost-of-Living Adjustments (COLAs): A COLA annuity increases payments by a set percentage each contract year. In exchange for these increases, you start with a lower initial income.

In our experience, annuity ladders tend to be the more popular strategy. An example of this strategy is purchasing one annuity every other year for 6 years. This allows you to dollar-cost-average your interest rates much like people do with stocks.

In addition to this, you can combine level-pay and COLA annuities to hedge against inflation while still protecting some of your purchase power. While these are strategies to combat inflation, they are not truly benchmarked against inflation and may over or undershoot actual future inflation.

Lastly, a common strategy people use is to put enough in annuities to get a guaranteed baseline income. This guarantee gives many people the confidence to be more aggressive with their other funds, helping to keep up with inflation.

Is It a Good Time to Buy an Annuity?

This question is never easy to answer because there is no right answer.

An annuity has its pros and cons:

Immediate Annuity Considerations: High Inflation, Market Volatility

Pros

  • Guaranteed lifetime income (your IRR increases the longer you live)
  • If bond yields remain strong or grow, annuity rates are likely to follow
  • Locking in high annuity rates in volatile economic climate
  • Hedging against simultaneous drop in both stock market and bond yields

Cons

  • Funds are permanently tied up (cannot rebalance this money)
  • You need to employ an annuity inflation strategy to manage inflation risk.
  • Locking in rates today means missing out if rates get higher in the future (though a laddering strategy can mitigate this).

The real answer to the question is this: it’s a good time to buy an annuity if it will bring you peace-of-mind and the annuity is part of a diversified strategy. Annuity rates are high right now, so putting some money into an annuity right now can be a part of a larger strategy. Just be mindful of your liquidity needs and don't put too much into an annuity.

Have Questions About Annuities?

If you have any questions about annuities or how to incorporate one into your retirement plan, call our U.S.-based annuity experts at (866) 866-1999. We promise to give you honest answers to your annuity questions without any sales pressure. We’re here to help.

You can also get fast, free annuity quotes with the blue annuity calculator on this page. There's no obligation and no phone number is required; no agent will call you. We respect your privacy.

A Note from Us:

Our goal is to help provide clarity. While we strive to provide the most accurate and up-to-date market information, the financial world moves fast. The data and predictions from BlackRock, Fidelity, and others mentioned above are based on market conditions at the time of their publication (see references) and are subject to change. This article is for educational purposes and doesn't constitute personal financial, legal, or tax advice. Because every retirement journey is unique, we always recommend speaking with a qualified professional to see how these strategies fit your specific goals.

References