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Safety-Seeking Americans Wary of Annuities, Stock Market

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The constant drumbeat of bad financial news has taken its toll on Americans in more ways than one, according to a survey released Wednesday, September 8, by Allianz Life Insurance Company of America, based on data collected in May of 2010 and a speech by SEC Chairman Mary Schapiro.

Americans are so afraid of outliving their money (more afraid than they are of death), according to the Allianz survey, that they would consider “an annuity-like solution” even as they express distaste for the term “annuity.” Over 80% of respondents chose moderate growth, monthly income guaranteed for life, and limited access to the principal over an investment that would provide a higher return without any guarantees.

What was surprising was that 54% of respondents had a negative reaction to the word “annuity” even as they chose an option with an annuity’s features over other types of investments. Yet annuities also ranked second in satisfaction among all financial instruments, beaten out only by gold and other precious metals. With the price of gold hovering near record highs, however, annuities seem the more affordable choice.

Schapiro, in an address at the Economic Club in New York on September 7, spoke about the steady retreat of small investors from Wall Street, as reported by retail broker-dealers, in the wake of the “Flash Crash” of May 6. Sophisticated automated trading mechanisms are seen as part of the problem, and Schapiro said the SEC will issue a report concerning the “Flash Crash” within the next several weeks.