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LIMRA Study Finds Annuities Provide Sense of Security


For one reason or another, annuities have been given a bad rap, most likely because of the complex nature of these financial tools. But regardless of whether you love them or hate them, according to a recent LIMRA study, retirees who own them feel more secure than those who do not.

The study, discussed in a recent article from 401(k) Specialist magazine, found that 75% of retirees who own an annuity believe they will be able to live the lifestyle they want in retirement, compared to just 64% of retirees who don’t. Similarly, almost 70% of retirees who own an annuity claimed to be confident that their savings and investments will not run out if they live to age 90. Only 57% of retirees who don’t own an annuity agreed.

The report, The Differences They Make: An Advisor, an Annuity or a Formal Plan in a Retiree’s Life, also found that more than half of retirees who own an annuity actually own more than one. Nearly ⅓ own two annuities and 20% own three or more.

“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 wrote in the report. “Twice as many retirees who work with an advisor own an annuity, compared with retiree who don’t work with an advisor.”

LIMRA also stated that its research consistently shows that having a formal retirement plan leads to better outcomes. In fact, retirees and pre-retirees with a formal plan are three times as likely to feel very prepared for retirement. They’re also twice as likely to have estimated how long their assets will last and have a specific plan for generating income from their savings. A formal retirement plan typically includes determining income, assets and expenses, as well as identifying and mitigating any potential risks.

An annuity can be an important tool, providing a lifetime guaranteed income stream for their clients,” the institute concluded. They also found that annuity ownership rate is almost 70% higher among households that have completed a formal plan than households without.

Written by Rachel Summit

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