Sponsored by the Alliance for Lifetime Income.
Investors are increasingly eager and interested in protecting their retirement savings plan through annuities, according to a new study by the Alliance for Lifetime Income and CANNEX.
With Peak 65 in sight, the inaugural Protected Retirement Income & Planning (PRIP) Study shows that many investors, especially younger ones, are interested in annuities as a source of protected lifetime income they can count on to help supplement Social Security income. The long-tail effects of the pandemic, a challenging fixed-income environment, and historically low savings rates are all converging as retirement looms for millions of Americans. That realization has left many investors scrambling for solutions.
“The pandemic triggered a retirement reset in people’s minds, leading to this incredible demand today for the benefits of protected income solutions,” said Jean Statler, CEO of the Alliance for Lifetime Income, a nonprofit consumer education organization.
When included as a key part of a retirement plan, annuities can help protect investors against the ups and downs of the market and guarantee monthly income for as long as they live.
Here are seven top takeaways from the new PRIP study:
- Nearly all investors are interested in annuities.
More than 90% of investors believe protecting retirement income is important. Those with pensions decline considerably by age, resulting in an even stronger need and desire for protection among younger investors.
- Gen X has an even stronger desire for annuities.
A vast majority of investors ages 45-54 (71%) have some interest in purchasing an annuity as part of their overall retirement income plan and 22% are extremely interested.
- Gen X is more financially vulnerable for retirement than older populations.
Pension ownership stands at 65% for investors ages 65-75 but drops with each younger generation. Only 48% of retirement investors ages 45-54 have protected income from a pension. The study shows a critical need for protected income from annuities, to fill the gap left by pensions. A large portion of investors (29%) admitted they do not know enough about annuities to be able to identify the benefits.
- Younger investors see annuities as a replacement for pensions
More than half of investors under age 55 (58%) embrace annuities as an alternative to pension plans.
- A majority of investors with an employer-sponsored retirement plan show interest in annuities.
More than half of investors (56%) who have an employer-sponsored retirement savings plan— such as 401(k) and Roth 401(k) plans—are interested in investing in an annuity through that plan.
- Investors who are protected by an annuity and/or a pension are more confident in their ability to enjoy their retirement years
A whopping 92% of investors who are protected by an annuity, or a pension, feel confident about covering expenses in retirement (versus 79% of the respondents who are not protected.
- Investors who have an annuity are more satisfied with their financial professional.
A striking majority (84%) of investors with an annuity are very satisfied with their financial advisor versus those who do not have an annuity (74%).
To learn more about how to protect your retirement, visit protectedincome.org.