Love ‘em or hate ‘em, retirees feel more secure with them.
A new LIMRA Secure Retirement Institute study finds retiree annuity owners feel confident they are more likely to afford their “preferred retirement lifestyles”—even if they live to age 90 or older—than those who do not own an annuity.
The study found three-quarters of retirees who own an annuity believe they will be able to live the retirement lifestyle they want, compared with just 64 percent of retirees who don’t.
Nearly seven in 10 retirees who own an annuity are more confident their savings and investments will not run out if they live to age 90, compared with 57 percent of retirees who don’t own an annuity.
The report, The Differences They Make: An Advisor, an Annuity or a Formal Plan in a Retiree’s Life, finds more than half of retirees who own an annuity (own more than one annuity—nearly a third own two annuities; and 20 percent own three of more annuities.
“Institute research shows financial advisors play an important role to ensure people have done the needed planning to ensure they have a secure retirement,” LIMRA writes. “Twice as many retirees who work with an advisor own an annuity, compared with retirees who don’t work with an advisor.”
LIMRA also says its research consistently shows that having a formal retirement plan leads to better outcomes. Prior institute research finds retirees and pre-retirees who have a formal retirement plan are three times as likely to feel very prepared for retirement. They are also twice as likely to have estimated how long their assets will last in retirement and have a specific plan for generating income from their savings.
A formal retirement plan often includes determining income, assets and expenses, and identifying and mitigating the potential risks a retiree faces in retirement.
An annuity can be an important tool, providing a lifetime guaranteed income stream for their clients, the institute concludes. It found annuity ownership rate is nearly 70 percent higher among households that have completed a formal plan than households without plans.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
