Worry of Waning Retirement Income Big Reason for Annuity Purchases: Study

Consumers looking to bolster their Social Security or pension income, or looking for a guaranteed lifetime income, are buying annuities.

Those are the top two reasons for annuity purchases, according to a LIMRA Secure Retirement Income study of annuity owners. According to its research, the primary source of income for 70 percent of retirees is expected to change from the current primary sources of Social Security and pensions.

But when looking at preretirees (ages 55 and older, not retired) and workers ages 40–54, it’s a different story. With just 49 percent of preretirees and only 32 percent of younger workers saying that they’ll primarily rely on Social Security and pensions, both appear to be receding into the background—at least in younger workers’ expectations.

Instead, those still in the workforce are planning on using savings from employer-sponsored retirement plans, IRAs and other savings vehicles to fund retirement.

In fact, 40% of preretirees and 53% of workers ages 40–54 expect their primary source of income to be from their 401(k), IRA and other savings. But there’s a hitch: those income sources aren’t guaranteed for life, as are Social Security and pension income. And that leaves younger people with a dilemma: how to make their money last.