LIMRA online survey which was conducted in October, 2010 revealed that only a third of American retirees earn money from annuities. According to LIMRA Retirement Research associate managing director, Jafor Iqbal a big number of these pensioners depend solely on social security and pensions to meet their monthly household expenses including food, fuel and both home and auto owners insurance. Annuities constitute only four percent of their overall income. However, he mentioned that this trend is anticipated to shift in future in favor of personal savings, but all in all, annuities would still continue to be a great investment vehicle for anyone looking for a steady source of income.
The survey revealed a direct correlation between investing in annuity and age. Only 19 percent of pensioners below the age of 65 derive income from annuities while 49 percent of those aged between 75 and 79 derive income from the same investment instruments. It is quite fascinating to note that household income for retirees does not have a huge bearing on whether they receive income from annuities or not. 35 percent of retirees with an income of less than $75,000 depend on an annuity as the major source of income. Household assets are, however, paint a different picture altogether. Only 22 percent of pensioners with assets totaling less than $100,000 derive income from annuities as compared to 45 percent of those whose assets net worth ranges between $250,000 and $499,000, and 40 percent for households with assets in excess of $500,000. A However, 80 percent of the income comes from deferred annuity.
The key findings of the study were that consumers are more biased towards investment products that offer a guarantee, more so in hard economic times. The respondents were people aged between 55 and 79 years who have been in retirement for at least one year and have not held any paying job since then. All of the respondents had a household income of at least $35,000. In addition, eligible respondents were individually involved in all the decision making processes pertaining to domestic investments and savings.
Michael E. Dortch
President & Managing Agent
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania 19446
(800) 807-0762 ext. 602