When asked about their confidence in maintaining a financially healthy lifestyle during their retirement years, 47% of both retirees and pre-retirees say owning an annuity made them more confident they could maintain that lifestyle.
LIMRA points out annuities are an attractive means of providing investment growth and security for retirement income, especially in light of fears individuals may have about unfavorable market conditions (e.g., a drop in stock values) negatively impacting their retirement savings. The study found 71% of respondents want to have enough savings for lifetime income, and 64% want to remain financially independent throughout their retirement.
Other factors that make individuals confident about their retirement planning include:
- Confidence in their ability to manage their finances (62%);
- Expecting to live modestly in retirement (59%); or
- Saving enough for retirement (53%).
“Annuities can offer more monthly income than a straight draw down rate for [retirement plan] participants because they pool risk across participants.” Tim Walsh, managing director of Institutional Products at TIAA-CREF in Boston, recently told PLANSPONSOR. He also cited research from State Street Global Advisors which showed 80% of retirement plan participants said a regular monthly payout for retirement is a “must-have” (see “Annuities Give Participants Head Start for Decumulation”).