What 30-Years of S&P 500 Returns Reveal - And Why a 7%-Cap Index Annuity
Quietly Beats Bonds
When people ask whether an index annuity is "worth it", they're usually trying to understand the trade-off: You get interest when the market goes up - but only to a cap - and you never lose money in a down year.
That sounds simple, but the real question is: How does it actually play out over time?
To answer that, I looked at the past three decades of S&P 500 annual returns and compared:
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How often the index was positive for the year
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How $100,000 would have grown in the S&P 500 index over a decade (2016-2025, 2006-2015, 1996-2005)
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How $100,000 would have grown in an Index Annuity with a 7% cap over those decades
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And - here is a surprise - how the Index Annuity stacked up against Bonds (as represented by the Aggregate Bond Index)
The results are important to retirees across Northwest Ohio. Many of whom may be paying brokers in Sylvania and Perrysburg an annual fee to manage their nest egg.
2016-2025: A decade of big ups & downs
For this decade the S&P 500 stock index had eight years of gains.
S&P 500: $100,000 grew to ~$263,000
7%‑Cap Index Annuity: $100,000 grew to ~$172,000
The market had several huge years (20%+, 30%+), which the annuity capped at 7%.
But the annuity avoided the –4% and –18% losses in two years entirely.
Bond comparison:
The Agg had two negative years in this decade — including its worst year ever.
The annuity beat bonds by a wide margin.
2006-2015: The Financial Crisis and the Recovery
For this decade the S&P 500 stock index had eight years of gains.
S&P 500: $100,000 grew to ~$187,000
7%‑Cap Index Annuity: $100,000 grew to ~$176,000
This decade included the unsettling 37% loss of 2008.
The annuity loss nothing that year and compounded steadily throughout the decade.
Bond comparison:
The Aggregate Bond index did fine in the crisis, but their decade long compounded return still trailed the annuity's 5.8% annualized growth.
1996-2005: The Tech Boom, Tech Bust, and Rebound
For this decade the S&P 500 stock index had seven years of gain.
S&P 500: $100,000 grew to ~$215,000
7%‑Cap Index Annuity: $100,000 grew to ~$157,000
The late 1990's stock market boom produced enormous returns the annuity couldn't capture.
The annuity did avoid the three-year dot.com crash entirely.
Bond comparison:
The Aggregate Bond index had several flat and negative years during this decade. The annuity's steady compounding again came out ahead.
✅ The S&P 500 wins on total return.
✅ The annuity wins on stability.
✅ And the annuity beats bonds across all three decades.
Why This Matters to Retirees Across Northwest Ohio
1. The annuity eliminates losses
Bonds had multiple negative years - including historically bad ones.
The index annuity had zero.
2. The annuity compounds steadily
It's decade long results all clustered tightly between $157,000 and $176,000.
Bonds were far more erratic.
3. The annuity performs like a "super bond"
It delivers:
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Low volatility
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Better than bond returns
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No drawdowns of your principal
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No interest rate risk
For retirees who want stability without sacrificing long-term growth, that's a compelling combination.
For retirees who want stability and want current income, annuities are again a better choice.