According to a report from Cerulli Associates, only about half of all working (non-retired) households have a formal plan for retirement income. Even more alarming is the fact that this number is lower than last year’s – that despite widespread awareness programs on retirement planning and the dangers of procrastination, fewer and fewer households are confident in their plans.

Individuals in higher age brackets are better prepared for retirement than younger investors, with the greatest preparedness seen among 60- to 69-year-old investors, notes the Cerulli Associates report, “Annuities and Insurance 2015: The Evolution to Sustainable Retirement Income Solutions,” prepared with data from Phoenix Marketing International (PMI). Yet of those approaching retirement, only 55 percent have a retirement income strategy in place by the time they leave the workforce.

Wealthier individuals are more prepared for retirement than those with fewer investable assets. Not coincidentally, these individuals are also more likely to work with a financial advisor and have balanced, diversified financial portfolios. This information is particularly vexing because individuals with a precarious plan are the ones who run the greatest risk of running out of money in retirement.

According to the report, individuals have three main economic concerns:

  • Protecting current wealth levels
  • Developing a retirement plan
  • Caring for their health and the health of family members

However, those surveyed also revealed concerns over maintaining a positive cash flow, and worry that the value of their household investments will decline. Their highest financial goals include:

  • Ensuring a comfortable standard of living during retirement
  • Protecting current wealth levels
  • Minimizing taxes on income and capital gains
  • The ability to leave assets to heirs

Some households clearly see the advantages of an annuity. Out of all households surveyed, only 7 percent said they own a variable annuity; 13 percent own a fixed annuity. However, 13 percent also said they recognize that annuities are a good way to generate income, 13 percent say annuities are a good way to protect assets, and 12 percent say annuities are a good way to diversify assets. Still, only 3 percent say they plan to purchase an annuity in the coming year.

While annuity ownership could certainly help meet the financial goals of those close to retirement, the Cerulli report shows that annuities still don’t have a positive reputation among most households. Ten percent say that annuities are too expensive, 10 percent that they’re not familiar with annuities, and 8 percent that annuities are too confusing or complex. While 17 percent of households say that, based on their financial situation, they don’t think they need an annuity, this is a dramatic improvement — 28 percent of surveyed individuals said the same thing in 2014.

While an advisor’s No. 1 goal is to help clients create a solid finance plan for retirement, a fixed indexed annuity (FIA) can be an ideal part of a diversified and balanced financial portfolio, uniquely meeting the needs of those approaching retirement age. Advisors can actively educate clients on the benefits of FIAs — how they can provide guaranteed lifetime income and ensure a predictable cash flow throughout retirement, while providing tax advantages and protecting current wealth.