In the Benefits Pro “Clueless about guaranteed lifetime income,” Marlene Y. Satter says that Americans know very little about guaranteeing lifetime income with annuity products. CANNEX and Greenwald & Associates recently performed a study to see what Americans know about lifetime income sources. The first thing they found was that Americans want and need sources of retirement income. Most people know about the lifetime income they will receive from Social Security. While that is an important source, it doesn’t cover everyone’s living expenses and most Americans need more income during retirement. If you are one of the lucky few that will receive a pension from your employer, then you are obviously aware of that form of lifetime income as well. But what if you don’t have a pension and Social Security payments will not be enough to cover your financial needs?
Researchers found that people aged 55-75 who have at least $100,000 in investable assets have a strong desire for guaranteed lifetime income to supplement their Social Security payments. They value this guaranteed income highly because they know that it helps them manage their overall finances and spending, but that it also offers them a peace of mind during retirement. A full 40% of retirees pay all of their expenses using sources of guaranteed income. They don’t spend down their investments at all. Most retirees try to keep their discretionary spending low and pay all of their expenses from Social Security and pensions, rather than using retirement savings. Those surveyed said that guaranteed lifetime income sources pay for 79% of their basic living expenses. This is great for those who have both Social Security and pension income coming in, but many Americans need another source of guaranteed lifetime income.
Annuities are that source. Unfortunately, most people are unaware of the income benefits that they can receive from annuity products. Most Americans place a high value on guaranteed lifetime income, but they don’t know where to find it outside of Social Security and pensions. The study used a new index to see what value consumers place on products like annuities that guarantee lifetime income. Only 16% of people scored highly on this index and said that they were likely to invest in these products. This is probably because they aren’t aware of the benefits offered by annuities. Researchers also found that consumers didn’t understand the differences between the multiple types of annuity products. Less than 1/3 of those studied said that they were very familiar with fixed annuity products. The consumer groups who placed the most value on guaranteed lifetime income were women, people with less than $1 million in assets, those who’ve had an advisor discuss annuities with them and people who rely on others to make their investment decisions.
Annuity products are one of the only ways to guarantee the lifetime income that is so valued by most consumers. Speak with a financial expert to see how an annuity might help you create guaranteed lifetime income for your future financial plans.