Retirees with seven-figure portfolios face a different set of problems than the average saver. The question isn’t whether there’s enough money to last, it’s how to move that money through required distributions, estate transfers, and market swings without losing more of it to taxes than necessary.
Annuities solve specific structural problems that stocks and bonds don’t: forced distributions, longevity risk, and the gap between what heirs receive and what the IRS collects first.
Key Takeaways
- Qualified Longevity Annuity Contracts let retirees shelter up to $210,000 per person from required minimum distributions in 2026, with a married couple able to shelter up to $420,000 combined.
- Fixed indexed annuities and multi-year guaranteed annuities are the two product types most commonly used by high-net-worth retirees to manage RMDs and pass on qualified accounts without market risk.
- The 2026 federal estate tax exemption sits at $15,000,000 per individual, which changes how annuities fit into a broader legacy plan compared to prior years.
Why High-Net-Worth Retirees Use Annuities Differently
A retiree with $500,000 saved is usually buying an annuity to create income that covers a gap between Social Security and monthly expenses.
A retiree with $5 million or $15 million is often solving a different problem. Required minimum distributions on a large IRA or 401(k) can push someone into a higher tax bracket than they were in during their working years.
Annuities, particularly QLACs, give retirees a legal way to remove a portion of qualified assets from that calculation.
Annuity sales have climbed for four consecutive years, according to LIMRA, and insurers have responded with more products built around tax deferral, income riders, and legacy planning rather than pure accumulation.
A 2026 Allianz study found that 67% of Americans are more worried about outliving their savings than about dying. Among wealthier retirees, that worry shows up less as “will I run out” and more as “how much of this goes to my kids versus the IRS.”
Qualified Longevity Annuity Contracts (QLACs)
QLACs are the product most specific to the high-net-worth conversation. Congress raised the contribution cap under SECURE 2.0, eliminating the old 25%-of-account-balance rule and replacing it with a flat dollar limit.
For 2026, that limit is $210,000 per person, applied across all QLAC contracts an individual owns. Because the limit is per person rather than per household, a married couple can shelter up to $420,000 combined if both spouses fund their own contracts.
Money placed into a QLAC is excluded from RMD calculations until payments begin, and payments can be deferred as late as age 85.
That deferral window is the entire point: a retiree who doesn’t need the income now can push it into a future decade, lower their taxable RMDs in the interim, and still guarantee income if they live into their nineties. The tradeoff is liquidity.
Funds committed to a QLAC are locked in, so advisors generally recommend using QLACs only with money that isn’t needed for near-term expenses.
Fixed Indexed Annuities for Legacy Planning
Fixed indexed annuities (FIAs) link growth to a market index while protecting principal from downturns. For high-net-worth retirees, the appeal isn’t the upside cap, it’s the combination of principal protection with a mechanism to pass qualified accounts to heirs more efficiently.
Products like the Allianz 222 and Athene Agility are frequently used in this context because they include RMD-friendly features and death benefit structures aimed at reducing what’s lost to taxes during a wealth transfer.
Fees and rider costs vary by carrier and contract, so the specific numbers on any FIA need to come from the actual contract terms rather than marketing material.
What matters more at this net worth level is the AM Best rating of the issuing company, since a contract’s guarantees are only as strong as the insurer standing behind them.
A++ and A+ rated carriers, including MassMutual, New York Life, and Pacific Life, consistently show up in comparisons aimed at wealthier retirees because of financial strength rather than headline rates.
Multi-Year Guaranteed Annuities (MYGAs)
MYGAs function similarly to CDs: a fixed rate locked in for a set term, typically three to ten years. As of early 2026, top MYGA rates from A-rated carriers range from roughly 5.00% to 5.35% on three-year terms and 5.10% to 5.65% on five-year terms.
Some products advertise rates as high as 7.65% under bonus or short-term structures, though those figures usually apply to promotional periods rather than the full contract term.
For a high-net-worth retiree, MYGAs are less about generating retirement income and more about parking a portion of a portfolio at a guaranteed rate while deciding on a longer-term strategy.
They’re commonly used as a holding vehicle before annuitizing into a SPIA or rolling funds into a QLAC once a distribution timeline is settled.
Comparing the Main Options
| Annuity Type | Primary Use for High-Net-Worth Retirees | 2026 Rate or Limit | Liquidity |
|---|---|---|---|
| QLAC | Reduce RMDs, defer taxable income to later years | $210,000 per person contribution cap | Very low; funds locked until payout age |
| Fixed Indexed Annuity | Principal protection with legacy and RMD features | Growth tied to index, varies by cap and participation rate | Low to moderate; surrender charges apply |
| MYGA | Guaranteed short-term rate on a portion of assets | 5.00%–5.65% on 3–5 year terms (top-rated carriers) | Low during term; penalty-free window at renewal |
| SPIA | Immediate guaranteed income to cover a spending gap | Payout rate depends on age and interest rates at purchase | None once purchased |
Estate Planning Considerations
The federal estate tax exemption for 2026 is $15,000,000 per individual, up from $13,990,000 in 2025. Retirees below the exemption threshold have more flexibility to use annuities for income and RMD management without worrying as much about estate tax exposure.
Retirees above it tend to lean more heavily on death benefit riders and beneficiary structuring within FIAs and QLACs to control how qualified assets move to the next generation.
Annuity contracts also bypass probate when a named beneficiary is in place, which matters for retirees moving assets to heirs quickly and privately.
That feature isn’t unique to high-net-worth retirees, but the dollar amounts involved make it a bigger factor in the overall estate plan.
Choosing Between Products
Most retirees at this wealth level don’t pick one annuity type and stop there. A common structure involves a QLAC to manage RMDs on a portion of a large IRA, a MYGA to hold cash at a guaranteed rate, and an FIA to combine growth potential with a legacy-focused death benefit.
The right combination depends on the size of the qualified account, the retiree’s age, health, and how much of the portfolio needs to stay liquid.
Carrier selection matters as much as product selection. AM Best ratings, years in business, and complaint indexes with state regulators are practical starting points before comparing rates or riders, since a strong rate from a weaker carrier carries more long-term risk than a lower rate from a top-rated one.
Conclusion
High-net-worth retirees typically use annuities to solve tax and legacy problems rather than to chase returns. QLACs, fixed indexed annuities, and MYGAs each address a different piece of that puzzle, and most retirees end up combining more than one.