Posted by Although annuities are considered by many experts to be ideal for retirement planning, why aren't as many people buying annuities in the market as industry analysts expected? This is a conundrum that has long plagued insurance companies, financial advisors and investors. A recent report from Boston College’s Center for Retirement Research: “How much do people know about the value of annuities and their add-ons?*" reveals part of the answer to the question of those who don't know about annuities, or have misconceptionspensionFor potential buyers, these findings are food for thought.
The Current State of the U.S. Annuity Market
Annuity sales reached a record $2023 billion in 3850 and are expected to continue growing this year. However, despite the market's already strong performance, industry experts believe that demand for such financial instruments is far from being met. The research center's survey shows that although about half of the respondents said they were willing to buy annuities at the current market interest rate, the actual purchase proportion was only 12%.
Lack of annuity knowledge
The report concluded that people arepensionThe hesitation is not due to a lack of interest, but a lack of understanding of the product itself and how to purchase it. In fact, a simple Google search for the term “annuity” returns results that sound more like warnings than enticements.
Messages that aren't warnings are often filled with financial jargon, exaggerated stories and complexity that can turn even the savviest investors off.
(>>>Related reading:Comparison of American annuity insurance product types, prices and advantages and disadvantages of American annuities )
Underutilization of Annuities
Since 1965, economists have argued that many families should save at least some of their wealth in retirementAnnuity. Yet the University of Michigan's National Biennial Health and Retirement Study of Americans 50 and older found that only 12% of households with more than $10 in financial assets chose to start fromAnnuity insurancegain income.
Solution: Improve awareness and operability of annuities
The report points out that to actually buy an annuity, it is not enough just to want to buy it, but also requires a specific, step-by-step plan. For example, a classic experiment found that providing students with popular information about the importance of vaccines can generate an intention to vaccinate, but only those groups who were given a specific plan to vaccinate actually received the vaccine.
This result was verified in multiple experiments, leading to the conclusion:Ideas and intentions, by themselves, are not enough to produce action, but require concrete plans.
Article summary
pensionAs a stable source of retirement income, it plays an important role in retirement planning. However, the lack of awareness of annuities in the market and the complexity of the purchase process have become obstacles to their wider adoption. By increasing public awareness of annuities, streamlining the purchasing process, and providing more financial education, we can help more people recognize the value of annuities and use them as an important tool to secure their retirement. (Full text ends)
(>>>Recommended reading:2024 Annuity Guide: 6 Misunderstandings about American Annuity Financial Management and Their Truths )
– Click to enter the self-service quote for US dollar retirement annuity insurance –Source:* “How Much Do People Value Annuities and Their Added Features?”, Boston college, 2024/01/02, https://crr.bc.edu/how-much-do-people-value-annuities-and- their-added-features-2/
