RT Journal Article
SR Electronic
T1 Employee Opinions about Partial Annuitization in a Retirement Plan
JF The Journal of Retirement
FD Institutional Investor Journals
SP 9
OP 31
DO 10.3905/jor.2021.1.095
VO 9
IS 3
A1 Michael Finke
A1 Jason J. Fichtner
YR 2022
UL https://pm-research.com/content/9/3/9.abstract
AB Prior research finds mixed evidence of annuity preference among workers. In a survey of participants in an employer-sponsored retirement savings plan, the authors found that nearly twice as many prefer a mix of annuitized income and investments to a system that offers only investments or only a pension. When given a choice to allocate savings among stocks, bonds, and an income annuity, respondents would place 33.5% of their total retirement savings in an income annuity, and higher annuity allocations are preferred by older and average-income respondents. The most important attribute of a retirement savings plan is the ability to understand how much a retiree can safely spend. Eighty-one percent of participants indicate that they are somewhat or highly likely to prefer a retirement plan that substitutes guaranteed income for bond investments. The peace of mind offered by a product that provides a guarantee of lifetime income, the reduced fear of outliving savings, and the ability to budget spending in retirement are the most frequently cited reasons for preferring an annuity.