RT Journal Article
SR Electronic
T1 Debt, Illiquidity, and Financial Illiteracy as Barriers to Annuity Ownership
JF The Journal of Retirement
FD Institutional Investor Journals
SP 33
OP 53
DO 10.3905/jor.2022.1.124
VO 10
IS 2
A1 Hallie Davis
A1 Andrea Hasler
A1 Annamaria Lusardi
YR 2022
UL https://pm-research.com/content/10/2/33.abstract
AB This article examines individuals’ balance sheets, financial situations, and retirement planning steps to understand the barriers to annuity ownership and identifies the financial and sociodemographic factors that contribute to annuity ownership. Using data from the 2018 National Financial Capability Study, we conduct an empirical analysis of individuals in the retirement-planning phase of the life cycle (ages 40–61) and individuals of retirement age (age 62 and over). We find that debt obligations, lack of access to liquidity, and low financial literacy are all likely barriers to annuity ownership; the annuity owners in our sample are more likely than the non-owners to have access to liquidity and to report higher levels of financial satisfaction. Results indicate that access to liquidity and to professional investment management are positively associated with annuity ownership. Furthermore, financial literacy could lead to increased take-up rates through improved access to liquidity and ultimately enhanced retirement outcomes.