LIMRA Study Shows Interest in Annuities

The research finds that individuals most likely to be interested in annuities are younger and still working, which LIMRA SRI says creates an opportunity for future conversations for advisers.

LIMRA Secure Retirement Institute (LIMRA SRI) research shows that individuals most likely to be interested in annuities are younger and still working.

LIMRA SRI wanted to take a closer look at those who debated buying annuities but decided not to purchase and find out why. Forty-two percent of these consumers were open to the idea of annuities. They feel annuities are good products and would consider purchasing in the future.

The top reason for not buying annuities for this group was that it wasn’t the right time (44%). Nearly two-thirds of this segment is not retired and only three in 10 of the non-retirees plan to retire in the next 10 years. Also within this group of consumers, 61% say having enough money to last through retirement years is their single most important objective for their assets in retirement.

On the opposite side of the spectrum, 18% of those who didn’t buy an annuity would most likely never own one. They most identified with the statement they do not like annuities and would likely never consider buying one. About half of this group is already retired and one-third plan to retire in the next four years. Another characteristic of this group is they give the highest importance on control over how investments are managed and are more likely to have guaranteed income through their pensions, which is not the case with younger workers.

Defined contribution (DC) plan sponsors have been hesitant to offer annuities as an investment option to participants, mostly for want of a better safe harbor for selecting an annuity provider that would protect them from fiduciary liability. Some also believe the take-up rate by employees would be low.

LIMRA SRI points out that prior research shows retiree annuity owners feel more confident that they are more likely to afford their preferred retirement lifestyles–even if they live to age 90 or older–than retirees who do not own an annuity. Seventy-three percent of retirees who own an annuity believe they will be able to live the retirement lifestyle they want, compared to just 64% of retirees who don’t own annuities. Additionally, 69% of retirees who own an annuity are more confident that their savings and investments will not run out if they live to age 90, compared with 57% of retirees who don’t own an annuity.