Income Annuity Shoppers Might Be Splitting: Cannex
The amounts for consumers who want benefits now and those who will wait seem to be moving in different directions.
U.S. consumers seemed to be looking for less income from immediate income annuities in the fourth quarter of 2022, and more income from deferred income annuities, according to Cannex Financial Exchanges.
The Toronto-based data services firm uses its own income annuity search data to produce quarterly shopping activity statistics.
For income annuities with benefits streams starting in less than 13 months, the average annual income sought fell 1.3%, to $39,643.
For income annuities with benefits streams starting 13 or more months in the future, the average annual income sought increased 22%, to $50,857.
What It Means
Consumers who are converting assets into annuity income right away might feel as if they’re too strapped for cash to buy extra income.
Income Annuities
Consumers can use some kinds of annuities to build nest eggs.
The CANNEX quarterly income annuity figures cover income annuities, or the kind of contracts that a retiree uses to turn the nest egg into a lifetime stream of benefits payments.
The Premiums
CANNEX expresses the cost of the income annuities covered by the search data in terms of the size of the single-premium payment needed to produce the desired benefit.
For immediate income annuities, the average premium payment entered by shoppers fell 1.8%, to $362,034.
For deferred income annuities, the average premium payment used increased 9.8%, to $315,450.
Shopper Ages
For immediate income annuities, the average shopper age was 67.5 years, down from age 68.3 a year earlier, and the average income start date was 2.1 months in the future, up from 1.8 months in the future.
For deferred income annuities, the average shopper age fell to 61.3 years, from 62.1 years, and the average benefits start date deferral dropped to 5.6 years, from 6 years.
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