The pitch is common at retirement seminars: a salesman tells a room of retirees over complimentary dinner that annuities can outperform the stock market. MarketWatch examined this exact claim in June 2026, and found the answer depends almost entirely on which annuity product is being sold and how "outperform" gets defined.

Annuities are not all the same. Fixed annuities offer a guaranteed crediting rate set by contract — the insurance company takes all investment risk. Variable annuities put your money into subaccounts (think: mutual funds wrapped in an insurance contract), so you bear the market risk directly. Registered index-linked annuities, or RILAs, the fastest-growing type in recent years, split the difference: your returns track an index like the S&P 500 up to a cap, and losses are cushioned by a floor or buffer. Each structure has a different risk-return trade-off, and blending them together is precisely how a sales pitch is designed to work.

On pure returns, variable annuities hold the same stocks as low-cost index funds, so before-fee returns are comparable. The cost is the insurance wrapper itself. Yearly charges for mortality and expenses typically run 1.0–1.5%; optional riders that guarantee income in retirement add another 0.5–1.0% or more. All-in annual costs of 2.5–3.5% are standard. At that level of drag, a variable annuity needs to generate genuine outperformance in its subaccounts just to match a plain index fund — an outcome the research literature on active management says is systematically unlikely over full market cycles.

RILAs are more complicated. The buffer or floor is real and has genuine value, especially for the risk that early retirement withdrawals happen during a downturn. But that protection comes with a cost: the cap or participation rate limits your upside. A RILA tied to the S&P 500 with a 20% loss cushion and a 15% annual cap captures less than the full index in strong years. Whether that trade works depends on how volatile the market actually is, the specific contract terms when you buy, and how much you actually spend in retirement — a calculation a seminar pitch does not make, because the right answer depends on the future.

Regulation matters. Variable annuities and RILAs are classified as securities, overseen by both the SEC and state insurance regulators — so the broker selling them must be registered and is required to meet suitability or best-interest standards, as FINRA notes. Fixed indexed annuities, by contrast, are sold as insurance products only, by state-licensed insurance agents not subject to the same federal securities rules. The steak-dinner seminar is almost always for fixed and fixed-indexed products, where regulatory barriers for the seller are lower.

Commission structure is the other piece. Variable annuities have historically produced some of the highest commissions in retail finance — a pattern Reuters documented back in 2014 — along with the compliance burden that such payouts trigger. Fixed-indexed annuity commissions often run 5–8% of your premium upfront, baked invisibly into the product's terms rather than shown as a separate charge. That structure is not inherently dishonest, but it creates an incentive for the salesperson to emphasize upside scenarios rather than the full range of outcomes.

There is real demand on the buyer side. The appetite for downside protection plus some market upside has deep roots. AXA was explicitly targeting this preference in the UK as early as 2008, and the same motivation drives RILA growth in the US today. The risk that early retirement withdrawals coincide with a market downturn is real and lopsided for people living off their savings; a guaranteed floor has genuine portfolio value that a simple return comparison misses.

Here is what an honest seminar pitch would sound like: certain annuity structures can reduce the damage from early market downturns in retirement, in exchange for capped gains and layered costs that reduce expected long-term wealth versus a diversified stock portfolio. That is a defensible choice for specific retirees — those very sensitive to early portfolio hits — but it is not "beating the market." The gap between those two statements is where regulatory risk and consumer harm live.