Why Annuity Demand Fell During the COVID Crash
September 16, 2020 by David Blanchett, Michael Finke and Timi Jorgensen,
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Market crashes, such as we experienced in March at the onset of the pandemic, drive assets to the safe haven of government bonds. But our research shows this flight to safety mindset did not translate to an increase in demand for annuities.
The recent drop in annuity demand during the COVID-19 market turbulence is a mystery. Older Americans gravitated away from investment risk. Using a survey of older respondents conducted after the March market crash, we find evidence that there is a dissonance between those who understand what annuities do and those who value guaranteed lifetime income.