On September 17th, 2025, the Federal Reserve voted to lower the federal funds rate by 25 basis points, bringing the target range down to 4.00%-4.25%. This marked the Fed’s first rate cut of the year, citing a cooling labor market, a slight uptick in unemployment, and persistent inflation still above the 2% goal. Policymakers acknowledged that downside risks to employment have increased, which ultimately tipped the balance toward easing monetary policy.
For advisors, the implications are clear: fixed annuity rates are unlikely to remain at today’s elevated levels. Carriers set their crediting and payout rates based on bond yields, and as the Fed pulls rates lower, insurers’ portfolio yields follow. This environment creates significant pressure for carriers to reprice products, particularly in multi-year guaranteed annuities (MYGAs), fixed indexed annuities, and income annuities. Historically, these adjustments lag Fed actions by only weeks or months, meaning the current rate environment is almost certainly the best clients will see for some time.
Advisor Action Plan
- Prioritize quotes on fixed annuities now before repricing reduces available rates.
- Evaluate income annuity options for clients seeking guaranteed lifetime income while payouts remain favorable.
- Educate clients on the link between Fed rate cuts and annuity pricing to create urgency around timing.
- Segment clients by time horizon; those closer to retirement are most vulnerable to the impact of lower future guarantees.
- Monitor carrier communications as product repricing announcements are expected to accelerate in the weeks ahead.
The Fed’s September 17th decision is a turning point for the fixed annuity market. Rates have likely peaked, and each passing week increases the chance of carriers lowering their offerings as we have already seen some carriers begin this process. Advisors who act quickly can help clients secure stronger guarantees, higher fixed rates, and more robust retirement income. Waiting, on the other hand, risks missing one of the most favorable annuity windows in recent years.