Here Comes a Wave Of 65-Year-Olds

More Americans than ever will turn 65 in 2025. That will be a dominant theme for financial stocks in the years ahead.

- Telis Demos

About 4.2 million people in the U.S. are forecast to cross that age threshold next year, according to a report by the Alliance for Lifetime Income's Retirement Income Institute, citing Social Security Administration figures. This could represent the height of what is termed the "peak 65" zone, a period of years from 2024 to 2027 in which more than 4.1 million will hit that age level each year.

For financial-services firms, that likely means more demand for investments that can help people close the income gap they expect from not working. That can be as simple as putting their cash into higher-yielding vehicles, such as money-market funds. Already, investors' close attention to cash yields is a challenge for banks and brokers accustomed to supercheap deposits.

But it might also keep fueling a surge of money into annuities, aided by high rates.

They are growing fast. Back in 2022, U.S. individual retail annuity sales were less than $300 billion, according to Wink, a life-insurance market research firm. Sales are expected to be around $450 billion in 2024 and are forecast to exceed $520 billion in 2025.