The typical immediate annuity buyer is a 73-year-old woman who pays about $107,000 in premiums for her contract.
Researchers at LIMRA, Windsor, Conn., have presented an analysis of guaranteed income annuity buyers in a report based on a review of about 55,000 immediate annuity contracts issued in 2008 and 2009.
An immediate annuity is an annuity contract structured in such a way that income payments begin soon after the time of purchase.
The market for immediate annuities is still small. LIMRA says fixed immediate annuity sales are increasing, but it is predicting sales of the contracts will total just $12 billion in 2014.
Government agencies have been talking about encouraging participants in 401(k) plans and other defined contribution plans to use immediate annuities or similar vehicles to convert retirement savings into streams of guaranteed lifetime retirement income.
In theory, the potential size of the immediate annuity market could be as high as $250 billion, LIMRA says.