Given $100K, Americans 45+ Prefer This Investment Over Stocks

As retirement approaches, people and financial advisors don’t always see eye to eye on where to invest a lump sum:

• 64% of people ages 45–75 would invest $100,000 in an annuity rather than the stock market.
• 62% of financial advisors recommend investing the money in stocks instead.

While annuities and stocks are common in retirement planning, it’s important to understand how each works and what distinguishes them.

Investing in Annuities

An annuity is a contract with an insurance company that provides regular income payments. You can fund it with a lump sum or a series of payments. In return, the insurer sends you income—either starting right away or at a future date—for a set period or the rest of your life.

Annuities are seeing an uptick in investor interest. Annuity sales jumped by 3%, totaling $223 billion in the first half of 2025 from the previous year, according to LIMRA, which beat the record set in the first half of 2024. The agency said as many as one in five pre-retirees have an annuity.

Benefits of Annuities

Annuities can be attractive investment options, particularly for investors over the age of 45. The benefits of annuities include:

• A steady stream of income, valuable if you’re worried about outliving your money, with a lifetime payment option
• Payments remain fixed even during periods of market volatility
• Provides tax-deferred growth before you begin taking payments, so you won’t pay taxes until you make withdrawals
• As interest rates rise, your annuity payouts can increase and can help boost their long-term value

Risks and Downsides of Annuities

Annuities can provide steady income and financial security, but are also complex and may deliver lower returns. Many financial advisors caution against them due to high administrative fees, limited investment options, surrender charges, and difficulty accessing your money. Plus, withdrawals are taxable.

Best Time to Take Annuity Payments

Some financial advisors say the ideal time to start annuity payments is between 70 and 75. Waiting until this range can increase the size of your monthly checks.

Also, you can coordinate your annuity payments with other retirement payouts, including Social Security payments and required minimum distributions (RMDs) from your retirement accounts. Together, these income sources can help prevent you from running out of money in retirement.

Investing in the Stock Market

Investing in the stock market means buying shares of a company, making you a partial owner. You can purchase them through a brokerage account or a robo-advisor. Stocks can offer strong growth, diversification, and dividend income, but they’re volatile and may take time to build value, requiring patience from investors.

“I recommend stocks over annuities because I value flexibility,” said Hazel Secco, CFP®, CDFA®, founder, and CEO of Align Financial Solutions. “Stocks can adapt as life changes, so clients don’t panic when their priorities or circumstances shift, whereas annuities tend to be more rigid with fewer options.”

If you’re over 45 and seeking a steady income, Secco suggests investing in dividend-paying stocks because “you still have years to grow your portfolio while working and contributing, which benefits both the accumulation and distribution phases.” She says keeping a diversified mix of stocks and fixed-income investments can give you more flexibility and growth potential than an annuity.

So, Which One To Choose?

The best choice depends on your risk tolerance, goals, and timeline. According to Secco, annuities can work well for low-risk investors because they provide predictable income when needed. But they can be costly and may not be ideal if you want to pass assets to your heirs.

If you have a longer time horizon, especially in your 40s or 50s, Secco advises a portfolio with a mix of equities and fixed-income assets. These can provide a steady income and growth. Given their nature, you may need a more hands-on approach with stocks.