That marks a reversal of the trend seen in previous years: In 2005, the proportion of fixed annuity owners increased to 51% from 35% in 2001. Now, it’s down to 44%. In contrast, 56% of nonqualified annuity owners have variable annuities, up from 49% in 2005, according to the study conducted by The Gallup Organization and Mathew Greenwald & Associates in conjunction with the Committee of Annuity Insurers (CAI).
Variable and fixed annuities have been neck and neck in ownership over the years. Over time, variable annuities have generally gone up (in 1995 only a third of annuity owners held variable annuities), the research shows.
Typical Annuity Holder
The typical nonqualified annuity owner is a 70-year-old retired woman with a moderate income. The survey found that eight out of 10 non-qualified annuity owners have annual household incomes below $100,000; almost half (42%) have annual household incomes below $50,000. Most non-qualified annuity owners are female (58%). Most owners are also retired (69%), which is up from 58% in 2005.
The majority of non-qualified annuity owners are married (60%). One-quarter of owners are widowed (25%), and less than one in 10 are divorced (7%) or have never been married (7%), according to the study.
Other Sources of Retirement Income
While the survey did not look at the ownership of qualified annuities, it found that 55% of owners of non-qualified annuities have participated in a retirement program offered through an employer at some point during their working careers.
Most non-qualified annuity owners believe that they have done “a very good job of saving for retirement” (91%, which is a slight increase from 2005). A majority (79%) think annuities are an important source of retirement security and make them feel more comfortable in times of financial certainly.
The proportion of owners who believe they have enough money to cover their needs remains unchanged since 2005 (55%), according to the report. However, they might have to cut back to do so: Annuity owners are more concerned that will have to cut back on their standard of living as they get older (55% in 2009 verse 40% in 2005).
Less than half (47%) of surveyed annuity owners don’t expect to take money out unless an emergency arises. Other annuity owners intend to receive payment from their annuity via a series of payments over a specific number of years (22%) or a series of payments guaranteed to last their lifetime or some stated period (18%).
Owners of fixed annuity contracts are more likely than variable annuity owners to agree that annuities offer a good return (80% versus 73%), owning an annuity makes them feel more secure in times of financial uncertainty (83% versus 75%), and annuities can help protect them against losing the money they invest (80% versus 74%), according to the study.
Probably unsurprisingly, variable annuity owners are more likely to agree that being able to invest in the stock market through annuities adds to the financial security of retirees (77%, compared to 64% of fixed annuity owners).
The full survey is available here.