Almost half of workers plan to lock in an annuity at retirement. Part of the reason is that employer-provided retirement benefits are most commonly distributed to workers in the form of an annuity, according to a new report “Older Americans’ Ambivalence Toward Annuities,” published by AARP’s Public Policy Institute. The study examines the results of an AARP survey of older workers and retirees regarding their choices for distributing retirement income.
The survey polled 1,750 older workers ages 50 to 75 and 670 retired people ages 59 to 75. The survey reveals that nearly five in 10 workers (48%) plan to take an annuity, either purchased from a life insurer or through their employer-provided pension plan, and nearly four in 10 (38%) expect to receive a lifetime income annuity.
The survey also showed that nearly three in four workers (74%) are receiving, or expect to receive, income from an annuity, and six in 10 (63%) are receiving income from a lifetime income annuity. Three in 10 workers and four in 10 retires with a choice of income distribution options intend to choose, or already have chosen, an annuity.
Of workers with a 401(k) type plan who are in a position to choose, 31% plan to elect a life annuity and 24% of retirees had made a similar choice.
When respondents were asked what features about annuities are “very” or “somewhat” convincing reasons for buying an annuity, 82% say that annuities “help you manage your budget because you get a predictable amount of money each month.” Annuities insure your paycheck and your playcheck so that you can never outlive your income.
Respondents also cited the fact that annuities:
- Offer peace of mind because the payments will continue as long as you live (82% of respondents)
- Ensure that your monthly income will not fall, even there is a large drop in the market (80%)
- Can help you remain independent because the money will never run out (76.8%)
- Offer certainty in respect to the rate of return (75.5%)
We are all living longer with many of us expecting to be active into our 90s. One of the best ways to preserve our independence is to provide for a source of income we cannot outlive, and that is what annuities do—provide safety, security and guarantees.
To learn a little more about annuities and keeping your financial security as you grow older, speak to one of our insurance experts at Insurance Planning Service at 800-220-5582 or use our online contact form today!
Photo Source: lifehappens.org