If you’re 55 or older and thinking about retirement, this question probably keeps you up at night:
Will an annuity protect me if the stock market crashes again?
Here’s the honest answer.
It’s not if the market crashes. It’s when.
We’ve seen it before: the tech bubble, the housing crash, the “lost decade” from 2000–2011 where markets went nowhere for 10 years. And if you’re retired during one of those stretches, it can feel devastating.
So where do annuities fit in?
Let’s break it down clearly and simply.
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 Happens to Your Portfolio During a Market Crash?
When the market drops 30–50%, your portfolio can drop with it.
If you’re still working, you may be able to wait it out.
But if you’re retired and taking income?
That’s when sequence-of-returns risk hits hard.
You could be withdrawing 4% thinking it’s “safe”… until your $1,000,000 portfolio drops to $600,000. Suddenly, that same withdrawal rate is no longer safe.
That’s exactly how some retirees are forced back to work.
💡 Pro Tip: The biggest retirement risk isn’t missing upside. It’s running out of money while you’re still alive.
How Does a Fixed Index Annuity Handle a Crash?
A Fixed Index Annuity (FIA) is designed for two things:
- Protection from market losses
- Participation in some market gains
Here’s how it works in simple terms:
- The insurance company uses call options tied to an index like the S&P 500.
- If the market goes up, you get a portion of the gain (based on a participation rate or cap).
- If the market goes down, you get 0% … but not negative.
Let’s say you put $300,000 into an indexed annuity right before a crash.
If the market drops 30%?
Your account stays at $300,000.
If the market rebounds 12% the next year?
You might get 5–7%, depending on the participation rate.
Instead of a rollercoaster, it’s more like stairs.
Up.
Flat during downturns.
Up again.
You don’t beat the market long term. But you don’t ride it down either.
👉 Want help comparing the best Fixed Index Annuities for growth and protection? Schedule a call here.
What About Income Annuities During a Crash?
This is where annuities really shine.
If you use an annuity with an income rider, you’re buying something very specific:
Guaranteed lifetime income.
For example:
- $300,000 at age 62 could generate around $22,000 per year for life.
- Wait until 65, and that could increase to roughly $29,000 per year.
(Exact numbers depend on the company and structure.)
Here’s the key:
Even if the market crashes, your income does not drop.
Your paycheck continues.
While others are cutting expenses and panicking, you’re still receiving guaranteed income.
That’s the difference between hoping your withdrawals are safe… and knowing your income is contractually guaranteed.
👉 Curious what your personal guaranteed income number would look like? You can use these annuity calculators or schedule a call to walk through it together.
But Are Annuities Perfect?
No.
And anyone who says they are is not being transparent.
Annuities:
- Are not designed to beat the stock market.
- Have fees (especially income riders).
- Limit upside in exchange for protection.
But they can serve a very specific purpose:
✔ Protect a portion of your retirement savings
✔ Provide guaranteed income
✔ Reduce stress during downturns
They’re a tool — not a cure-all.
And like any tool, they need to be used correctly.
Why Advisor Opinions Differ So Much
You’ve probably noticed something.
Some advisors hate annuities.
Some only sell annuities.
Here’s why:
- Fee-based advisors get paid annually on assets under management.
- Annuity-focused advisors get paid commissions.
- Everyone has a business model.
I specialize in annuities, but I also openly say that they’re not right for everyone.
The goal isn’t to move all your money into annuities.
It’s to decide whether a portion of your portfolio should be protected from market crashes while still allowing growth elsewhere.
That balance is where smart retirement planning lives.
Can You Combine Growth and Protection?
Yes.
Many retirees do something like this:
- Use part of their savings to create guaranteed income.
- Keep the rest invested for long-term growth.
- Add additional annuities later to “stack” income.
That way:
- The annuity covers essential expenses.
- The market portfolio handles inflation and upside.
- A crash doesn’t derail the entire retirement plan.
When the next recession hits… and it will… you’re not sweating every headline.
You’re covered.
👉 Want to see if this strategy makes sense for you? Schedule a call here.
So… Will an Annuity Protect You in the Next Crash?
Yes, if structured properly.
A properly designed annuity can:
- Prevent market losses on that portion of your portfolio.
- Provide guaranteed lifetime income.
- Reduce sequence-of-returns risk.
- Give you peace of mind.
What it won’t do:
- Beat the market long term.
- Replace all of your investments.
- Solve every financial issue.
The right question isn’t “Are annuities good or bad?”
It’s: “What portion of my retirement needs protection from the next crash?”
That’s where the real planning happens.
Conclusion
If you’re putting $300,000, $500,000, or more into something, you deserve to see all your options, not just one or two products.
Transparency matters.
Clarity matters.
Protection matters.
If you’re looking for growth with guardrails… or guaranteed income that doesn’t disappear in a bear market… an annuity may be worth considering.
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