A retirement seminar claimed that annuities can outperform the stock market. MarketWatch investigated on June 12, 2026, and found the claim does not hold up. Fixed annuities are unlikely to match the 8–10% average annual return that stocks have historically delivered over the long run.

But "annuities" is not one simple product. There are three main types. Fixed annuities guarantee a specific interest rate. Indexed annuities tie your returns to the stock market but limit how much you can gain. Variable annuities let you invest like you own stocks directly inside an insurance contract. Each type carries different risks and rewards. Mixing them together in a sales pitch is a common tactic.

Why Fixed Annuities Cannot Beat Stocks

Fixed annuities promise you a guaranteed return. The insurance company investing that money buys bonds and keeps some profit for itself. The rate it can pay you is limited by what bonds are earning right now, minus their costs and profit margin. Since bonds currently earn less than the 8–10% stocks have historically earned, the math does not work. You cannot get 8–10% from an insurer if they are earning less than that on bonds.

Fixed annuities do offer something stocks do not: your money stays safe and you get a predictable paycheck during retirement. That is valuable if you are retired and need steady income. The mistake the seminar speaker made was treating a safety product as if it could replace stocks, when really it works best alongside them.

What Indexed and Variable Annuities Actually Do

Indexed annuities sit in the middle. According to FINRA's investor guidance, they are riskier than fixed annuities but safer than variable annuities. They cap how much of a stock market gain you can keep, but protect you from losses. If the market goes up 20 percent, you might only get 10 percent. If the market falls, you might lose nothing. Over time, this trade-off means you give up big gains to avoid big losses.

Variable annuities are different. The law treats them as securities, which means stricter rules apply. They let your money move with the stock market fully. But they charge multiple fees: charges for managing the money, charges for the insurance part, and penalties if you want to withdraw early — sometimes for seven years or more. After all those fees come out, your actual return is much smaller than what the stock market itself earned.

Watchdogs like FINRA keep close watch on annuities because the fees and long lock-in periods create real problems for buyers, especially in retirement seminar settings where salespeople create pressure to decide quickly.

What Annuities Are Actually Good For

Annuities do solve real problems. They guarantee income for as long as you live, which helps if you are worried about outliving your savings. They protect your principal, which matters if you are retired and cannot wait for the market to recover from a downturn. These are genuine benefits.

But the cost of those benefits is steep: you give up control, you accept lower returns, and you pay fees. Saying an annuity will beat the stock market is not honest. What annuities actually do is trade market gains for safety and steady income — a choice some retirees need to make, but not a way to win against stocks.