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Annuity prospects may prefer general value message

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Older Americans with some cash to invest may respond better to general messages about income guarantees than to messages about funding specific types of post-retirement expenses.

Analysts at CANNEX Financial Exchanges Ltd., a Toronto-based company that provides annuity and bank price information for financial institutions, has published data supporting that possibility in a summary of results from a recent survey.

Related: IRI study: Lifetime income providing financial security for retirees

Greenwald & Associates polled 1,105 U.S. residents for CANNEX in December. All of the participants were ages 55 to 75, and all said they had at least $100,000 in investable assets. Most were baby boomers. Some were younger members of the “silent generation.”

CANNEX analysts found that 34 percent of all of the participants had concerns about maintaining their standard of living in retirement, up from 25 percent when the firm sponsored a similar survey in December 2015.

About 51 percent of the participants said it’s important for an annuity or other product offering a lifetime income guarantee to cover discretionary expenses.

Sixty percent said it’s important for a product offering a lifetime income guarantee to cover essential expenses.

In recent years, some financial advisors have tried talking to consumers more about the use of annuities to fund specific post-retirement expenses, such as Medicare-related out-of-pocket costs and long-term care costs.

When the survey team asked participants to judge three lifetime income guarantee messages, the broadest message won the highest marks.

Fifty-eight percent of the participants said a guarantee that would safely increase the amount of income a purchaser could take from investments each year would be desirable.

Only 49 percent of the participants said a guarantee that would cover specific expenses, such as supplemental health insurance premiums, would be desirable. 


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