By Susan Rupe
January 14, 2020
The picture of the
retirement landscape isn’t a pretty one. Boston College researchers estimate
that only about half of American households will be able to maintain their
current standard of living in retirement.
Annuities provide
guaranteed lifetime income, something that should be attractive to those who
fear running out of money in retirement. So why aren’t more Americans buying
annuities? Athene and the National Association for Fixed Annuities attempted to
answer that question in a recent webinar.
It’s not that
consumers don’t appreciate what annuities can do. Seventy percent of
respondents told a TIAA survey that receiving a guaranteed monthly “paycheck”
in retirement is important. But that same survey revealed only 13% of
working-age individuals have purchased an annuity, and only 12% of individuals
plan to buy an annuity at the time of retirement.
Over the past 15
years, researchers have attempted to solve the puzzle of why Americans like the
idea of annuities but are reluctant to buy them.
The list of likely
reasons ranges from price to loss aversion. But two behavioral researchers from
UCLA said the list of reasons boils down to one factor: uncertainty. And there
are four sources of that uncertainty.
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