Inflation is the hidden tax that eats into every retiree’s income. And many retirees are asking the same question:

“Do annuities actually grow fast enough to beat inflation… or even keep up with it?”

It’s a smart question—especially when you want market protection and growth. Traditional thinking says, “Just buy more stocks to beat inflation,” but if you’re retired or nearing retirement, that kind of volatility can feel terrifying.

The good news?

Yes—certain annuities can outpace inflation when you choose the right contracts.

And in this article, we’ll break down which ones do it best, how they work, and how to avoid the traps many retirees fall into.

Need help choosing the best annuity for your unique situation? Have questions about getting an annuity? If so, it’s best to speak with an annuity specialist. Watch this short video to see how I can help you do this (at no cost to you!)

Tip: See how much an annuity could pay you using our annuity calculator.

What Inflation Really Is—and Why It Matters for Retirees

Inflation today is confusing.

Some say it’s “back down to 2%,” others say it’s much higher—especially when you factor in rising costs from tariffs, food, housing, and healthcare.

Here’s the truth:

Your personal inflation rate depends on what you buy.

So the real question becomes:

How much does your annuity need to grow to maintain your purchasing power?

For many retirees, keeping pace isn’t enough… you want to beat inflation so your income lasts.

👉 If you want to see which annuities match your personal inflation rate, click here to schedule a call.

Why Many Retirees Get Put in the Wrong Annuity Contracts

If your advisor is primarily a “money manager,” they may only offer a narrow set of annuities—usually whatever their broker-dealer allows.

This is a big problem because:

• You may be placed in a contract that pays your advisor the highest commission, not the best outcome for you
  
• Many newer indexes are untested, meaning you’re a guinea pig
  
• Some contracts offer huge participation rates (like 200%+), but only based on strategies that don’t perform in the real world

As a fiduciary, I compare thousands of annuity products across all companies—not just one or two.

That’s why my clients consistently outperform those placed in limited “broker-approved” products.

👉 Want to see every option available to you? Book a call here.

The Most Popular Approach: Using Level Income as Your Base

Most retirees start with a level lifetime income annuity as their foundational income.

Example: A 66-year-old with $500,000 might receive:

• $3,100/month (joint)
  
• Guaranteed for life
  
• Never decreases

This type of payment acts like your pension.

 But the downside?

It never increases, so inflation eventually erodes your purchasing power.

How most retirees fix this:

They “layer” additional annuities over time.

Here’s a simple example using four contracts:

1. Base annuity at age 66 – ~$3,100/mo
   
2. Additional annuity activated at age 72 – ~$1,000/mo
   
3. Another activated at age 79 – ~$1,764/mo
   
4. Last one activated at age 85 – ~$2,500/mo

By age 85, that’s around:

$7,200/month total income

…from only $700k in total premium.

This strategy lets you:

• Beat inflation
  
• Increase income over time
  
• Keep part of your portfolio in the market
  
• Maintain flexibility

👉 Curious what your layered income plan would look like? Schedule a consultation here.

Annuities With Built-In Inflation Protection (COLA)

If you’d prefer automatic guaranteed raises, you can use:

A. Income Riders With Increasing Income

Companies like Allianz offer:

• Built-in increases
  
• Growth based on S&P 500 strategies
  
• Worst-case guaranteed income
  
• Real-life performance historically strong

Even if the cap is low (e.g., 4.25%), the income ratchets upward over time.

B. SPIAs/DIA with Guaranteed COLA (2–5% annually)

These offer:

• Guaranteed increases no matter what the market does
  
• Predictable, inflation-shielded income

However, the tradeoff is:

Lower initial income (and sometimes much lower).

Example:

A retiree wanting $5,000/month increasing 3% per year may need:

• ~$1.2 million with a COLA SPIA
  
• ~$967k with an income rider
  
• Only ~$806k with a level payout (but no COLA)

➡️ This is why understanding the tradeoffs is critical.

💡 Pro Tip: “Increasing income annuities” are best for retirees who expect long life expectancy or anticipate higher expenses later (healthcare, long-term care, etc.).

Beating Inflation Without Needing Income: MYGAs & Indexed Annuities

Income annuities aren’t the only solution.

Many retirees simply want their savings to grow safely.

A. MYGAs (Multi-Year Guaranteed Annuities)

Rates in 2025 are strong:

• 5-year terms around 5.8%
  
• 7-year terms around 5.5%
  
• 10-year terms around 5.5%–6%
  

With inflation around 3–4% (realistically)? You’re beating inflation by a healthy margin.

B. Indexed Annuities for Inflation-Fighting Growth

Companies like Lincoln and Delaware Life have strong:

• Renewal rate history
  
• S&P 500 participation rates (often ~55%)
  
• Real, audited performance data

These annuities:

• Protect you from market losses
  
• Give you sheltered S&P-linked growth
  
• Can outperform MYGAs when the S&P performs well

Example projection:

With $500,000:

• Zero loss during market downturns
  
• Potential strong growth in up years
  
• Multiple-year compounding

For retirees who want market benefits without market risk, this is the #1 option.

👉 Want help choosing the right growth annuity? Schedule a call with me.

So… Can Annuities Beat Inflation? Absolutely—If You Choose the Right Ones

The wrong annuity will barely keep up with inflation. But the right annuity—matched to your goals—can:

• Outpace inflation
  
• Provide lifetime income
  
• Lock in guaranteed raises
  
• Protect against market volatility
  
• Give you growth with zero downside risk

This is why a customized plan matters.

Conclusion

If you’re nearing retirement, you don’t have time for “trial and error.” 

You need a plan that locks in income, protects your principal, and grows enough to stay ahead of rising costs.

That’s what I help retirees do every day.

Need help with finding the best annuity for your retirement?

Click here to schedule a call with me.

On the call, I can help you:

• Determine what type of annuity is best for you
• Find the highest paying annuities for your unique situation
• Answer any other questions you may have

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