LIMRA: One-third of retirees get income from annuities
September 22, 2011 by Jenny Ivy
More than a third (35 percent) of all retirees receive income
from an annuity, according to new analysis from LIMRA.
draw income from an annuity are older retirees, those above the age of 75.
Jafor Iqbal, a retirement researcher at the financial services
consulting firm, says most retirees depend on pensions and Social Security to fund daily expenses, with annuities making up
4 percent of income. But, “In the coming years, we expect to see fewer Americans
retiring with pensions and more relying on their personal savings to fund their retirement. Annuities will provide a reliable way to
convert that savings into a guaranteed income stream.”
LIMRA found that
the likelihood of taking income from an annuity increases with age. Only 19 percent of
retirees under age 65 receive income from an annuity but the number jumps to 49
percent when looking at retirees age 75-79.
The survey also found
there’s a vast difference between household income and household assets and
whether these retirees are taking income from an annuity. Household income had
little effect on annuity ownership, for example. About a third of retired
households with incomes under $75,000 rely on income from an annuity; the
retired households with incomes of more than $75,000 increased about five
However, household assets seemed to influence annuity ownership greatly. Retirees with household assets under
$100,000 are about half as likely to receive income from an annuity (22 percent)
as those with assets of $250,000 to $499,000 (45 percent). About 4 in 10 retired
households with assets above $500,000 receive income from an annuity.
Only one-fifth of retirees who are receiving income from an annuity say
they have received it from an immediate annuity. The study found that all other
annuity income recipients are taking withdrawals from their deferred annuities.
“All of our research has revealed that consumers are attracted to
guarantees with their financial products – especially when the economy is
performing poorly,” said Iqbal. “This hold true for retirees as well. Our study
found that 40 percent of retirees receiving income from annuities say their
annuity income is guaranteed for life.
The online survey was conducted
in October 2010. Qualified respondents were aged 55 to 79; had been retired for
at least one year and had not worked for pay within the past year; and had
household incomes of at least $35,000. Furthermore, qualified respondents were
personally involved in making decisions about their household savings and
Originally published on BenefitsPro.com