More than half (nearly 54%) of Americans aged 44-75 expressed distaste for the word “annuity”, according to a recent survey from Allianz Life Insurance Company of North America (Allianz Life). An overwhelming 80 percent of the more than 3,200 surveyed preferred a product with four percent return and a guarantee against losing value over a product with eight percent return and subject to market risk, demonstrating the need for education about annuities and their place in retirement planning.
Americans expressed distrust in annuities according to a recent survey from Allianz Life Insurance Company of North America. Of the 3,200 surveyed, 80% preferred a secure product against a higher return product but subject to risk. The study, titled Reclaiming the Future: Challenging Retirement Income Perceptions, also found that respondents apparent distaste of annuities comes from opinions formed up to 20 or more years ago. Only 27% knows of innovations made with annuities during the past years, and even fewer realize that variable annuities allow contract holders to participate in market gains.
The study demonstrates that when people understand annuities they actually are satisfied. 76% of annuity owners are very happy with their purchase, 57% like the product because it’s a safe, long-term investment plan. In fact, 50% consumers ranked annuities second-highest in satisfaction among all financial instruments.
This data shows that Americans seek safety and guarantees over growth. When asked what features they find most important in a financial product, the top feature was “the ability to create a stable, predictable standard of living throughout retirement” followed by the “ability to provide a guaranteed income stream for life”. Americans would prefer moderate growth, monthly income and limited access to the funds rather than a similar instrument that provides total access but risks running out of money.
“The debate on retirement and the role annuities play in retirement planning needs to change,” according to Gary C. Bhojwani, president and CEO of Allianz Life. “No other financial product offers guaranteed income for life. Government, financial planners and the industry need to re-educate the American public about what these products do and how they can help secure a stable retirement.”