Did you catch the recent New York Times article featuring the summer’s best “beach reads?” Not surprisingly, there were no books about annuities on the list.
That’s a shame, because Americans need to learn more about annuities, the only financial product in the marketplace that guarantees lifetime income.
Fortunately, the Brookings Institution released three reports this summer about annuities:
The subject matter certainly isn’t typical beach reading material. But for anyone concerned about Americans’ retirement readiness, these reports address the role annuities can play to supplement Social Security in a 401(k) world, including:
A major concern for many retirement savers is outliving their money. Annuities can bring peace of mind with their guaranteed paychecks for life. However, only about 20 percent of U.S. retired households currently have an annuity.
As the Brookings reports illustrate, people are reluctant to buy annuities. One key reason is that many workers no longer focus on monthly retirement income. They used to do this when workplace retirement plans provided monthly pension checks. But, pension plans have largely faded away. More workers are in defined contribution plans, e.g. 401(k) plans, with a focus on asset building and investment management, not income in retirement. This focus needs to change.
Annuities are a vital part of the retirement security tool kit. And as the Brookings reports demonstrate, they can provide crucial guaranteed income for people at any retirement age.
Now that is worthwhile reading … and not just on a beach!
Jim Szostek is Vice President & Deputy, Retirement Security at the American Council of Life Insurers (ACLI). He helps guide ACLI policy on legislation and regulations affecting the U.S. retirement system. Prior to joining ACLI in 2008, he held positions at CIGNA and The Hartford.
