Well, I’ve seen it all now. Annuities got a huge thumbs up from the mainstream media when MarketWatch‘s Robert Powell wrote a long piece singing their praises in his commentary, “Retirees need fewer stocks, more annuities.”
Hey, that’s nothing new to any of you, but still, it’s a great sign to see a consumer publication take a positive stand on safe products. Powell based much of his opinions on two recently released reports: one by Putnam Investments and another by the Government Accountability Office.
The piece is so bullish on annuities that Powell writes “Retirees should invest just 5 percent to 25 percent of their portfolios in stocks, or at least that’s the case for those whose primary goal is to minimize the risk of running out of money and sustaining their withdrawals, said one report published by Putnam Investments new think tank.”
According to the GAO report, there’s a simple formula consumers can take to avoid the retirement blues of outliving their assets: saving more, working longer, investing wisely, delaying Social Security and buying a life annuity. Wahoo! Annuities are bringing sexy back. Ok, if not exactly sexy, can we at least say they’re an attractive retirement option? Why, sure we can.
Additional findings from the GAO study, by way of Powell’s commentary:
- Most retirees rely primarily on Social Security.
- Most Americans fail to maximize their benefits.
- An estimated 72.8 percent took benefits before age 65.
- Only 14.1 percent took benefits the month they reached full retirement age.
- “By taking the benefits on or before their 63rd birthday, nearly half — 49.5 percent– passed up at least 25 percent to 33 percent in additional monthly inflation-adjusted benefits that would have been available had they waited until full retirement age.”