More than a third (35 percent) of retirees receive income from an annuity, a recent LIMRA study has documented. That percentage, however, could increase as fewer Americans retire with a pension.
Jafor Iqbal, associate managing director, LIMRA Retirement Research, noted in a release detailing the results of the study that the majority of current retirees rely primarily on pensions and Social Security to fund daily living expenses, with annuities accounting for only 4 percent of their income. “But in the coming years,” he said, “we expect to see fewer Americans retiring with pensions and more relying on their personal savings to fund their retirement. Annuities will provide a reliable way to convert that savings into a guaranteed income stream.”
The online survey was conducted in October of last year and polled qualified respondents age 55 to 79 who had been retired for at least one year and had household incomes starting at $35,000.
As for the type of annuity, only one-fifth said they receive income from an immediate annuity. All other annuity income recipients reported taking withdrawals from their deferred annuities. The LIMRA study further found that 40 percent of retirees said their annuity income is guaranteed for life.
Other findings from the study include:
- The likelihood of taking income from an annuity increases with age. Only 19 percent of retirees under age 65 took income from an annuity, but 49 percent of those between 75 and 79 did so.
- Household income was not a determining factor as to whether retirees obtained cash from an annuity. About a third of retired households with incomes under $75,000 rely on monies from an annuity. But that percentage climbs only five percentage points for households with incomes of more than $75,000.
- When looking at household assets, however, the more assets held in the household, the more apt they are to receive annuity income. While 45 percent of retirees with household assets of $250,000 to $499,000 receive income from an annuity, only 22 percent of households with assets under $100,000 obtain annuity cash. About four in 10 retired households with assets above $500,000 receive income from an annuity.
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