Good news for advisors: A new study finds that 50 percent of pre-retiree and retirees with at least $100,000 in assets are interested in converting those assets into guaranteed lifetime income for retirement.
The 2014 study, “Finding the Right Mix: LIMRA Retirement Income Attitudes and Preferences,” found that non-retired Americans, younger Boomers (age 50-59), and those with assets between $100K- $499K are most interested in converting assets into guaranteed lifetime income for retirement (chart).
“Our research shows that these demographic segments are less likely to have a defined benefit pension plan and will have to rely on their own assets to create retirement income,” said Matthew Drinkwater, associate managing director, LIMRA Secure Retirement Institute. “Our study found 7 in 10 retirees and pre-retirees say having enough money to last their lifetime is a top priority, and nearly two thirds want to remain financially independent in retirement. Converting assets into a guaranteed income product, like an annuity, is a good way to ensure these goals are realized.”
Other findings from the study include the top concerns pre-retirees and retirees mentioned:
* Guarantees potentially not keeping up with inflation;
* Fear of locking in low rates of return,
* And lack of trust in companies backing the guarantees.
“Advisors and companies have an opportunity to help educate consumers about the benefits of annuities,” commented Drinkwater. “Other LIMRA Secure Retirement Institute research has revealed that a high level of annuity knowledge translates into positive attitudes about the products. Taking the time to explain how these products are designed and the unique value proposition they offer can overcome these concerns and address the very things these consumers say are most important to them.”