There is a great deal of continuity in the demographics and attitudes of nonqualified annuity owners.
That is one finding of the “2005 Survey of Owners of Nonqualified Annuity Contracts” from the Committee of Annuity Insurers. Conducted by The Gallup Organization and Mathew Greenwald and Associates, it is the ninth such survey. It probes the demographics and attitudes of NQ annuity owners.
In general, NQ annuity owners remain a predominately older, middle-class group of individuals with at least some college education and diverse occupations.
But in 2005, there were some notable changes, too. For example, an increased proportion of NQ annuity owners are women and owners of fixed (as opposed to variable) annuities. Also, the owners show increased concern regarding the risks that health and long term care costs pose to their retirement strategy.
In addition, the 2005 survey reveals that current workers and retirees have significantly different expectations regarding their sources of income in retirement.
As for demographics, the survey shows that most annuity owners purchased their first annuity before age 65 (83%). The average age for this was 50. The proportion of fixed annuity owners who were under 50 when they bought their first annuity has increased from 28% in 2001 to 39% in 2005. The average age of nonqualified annuity owners is 66. And, as noted, NQ annuity owners are more likely to be female than male (56% vs. 44%). For women, this represents an increase of 8% from 2001. Also, 58% are retired, whereas 35% are employed either full or part time.
Their annual household incomes tend to be moderate–66% are below $75,000 and 33% are below $40,000 (up 8% from 2001), while only 18% are at $100,000-plus.
Most (87%) believe they have done a very good job of saving for retirement. But they do have concerns here. A key concern is the cost of catastrophic illness or nursing home care. Almost 28% believe they or their spouse are at a high risk of needing to be confined to a nursing home in old age, an increase of 4% since the 2001 survey.
Similarly, 37% believe they or their spouse are at a high risk of suffering a catastrophic medical condition in old age, up 7% since 2001. In addition, nearly half (49%) are concerned that a catastrophic illness or need for nursing home care will bankrupt them in retirement.