WEST DES MOINES, Iowa, June 06, 2022 (GLOBE NEWSWIRE) — While nearly half of American adults saving for retirement (49%) believe they are on track to meet their savings goals- retirement, owning an annuity can really differentiate their future prospects the better it is, according to recent research from Athene, one of the leading providers of retirement savings products. In fact, among those saving for retirement, 75% of annuity owners said they felt on track to achieve the same goals, representing a 26% increase in confidence compared to the general population.
The study, which asked American adults about their retirement savings strategies, their thoughts on current market conditions, and their knowledge and understanding of annuities, also found that more than half of Americans (55%) fear outlive their retirement savings.
“Planning for a secure retirement requires a personalized approach, so it’s important for finance professionals and their clients to consider savings vehicles that can provide growth and protection for current and future financial needs” , said Mike Downing, executive vice president, chief operating officer. Officer and Chief Actuary for Athens. “As market conditions fluctuate, so do goals, strategies, and time frames between initial planning and retirement. In the face of these variables, annuities can help provide peace of mind by protecting savings and creating income for life.
Risk aversion increases as retirement approaches
While 18% of annuity owners who save for retirement say they rely primarily on their annuity(ies), the vehicles Americans as a whole rely on vary. Americans saving for retirement said they rely primarily on employer-sponsored retirement plans, such as 401k or 403b plans (36%), Social Security (21%) and cash (20%).
However, more than half of adults saving for retirement (58%) agreed that their retirement savings strategy will be more conservative as they approach retirement. Inflation is a top concern, with 71% of those saving for retirement saying they have changed or considered changing their retirement savings strategy to account for inflation. Market volatility is also a concern, as 62% said their strategy would be negatively affected by a pullback or recession.
Myths affect the understanding of annuities
Although a quarter of Americans (23%) don’t know what an annuity is, the benefits of variable, fixed and indexed annuities resonated with respondents. Guaranteed income (64%), favorable tax treatment (37%) and flexible features and benefits (37%) are the most important features that respondents look for in retirement savings products. Additionally, a majority of respondents would prefer their retirement savings to be paid out in the form of a series of paychecks rather than a lump sum (71% vs. 29%).
However, misperceptions around annuities persist, according to the survey. When asked to identify what characteristics they believe to be true of annuities, Americans did not respond, as only 27% understand that annuities allow for tax-free growth and only 22% agree that ‘they provide protection in bear markets.
Trusted finance professionals influence interest in annuities
The percentage of annuity holders increases significantly for those who have never worked with a financial professional (6%) compared to those who do (40%). The influence of financial professionals as trusted advisors and educators cannot be overstated, as more than half of Americans who currently work with a financial professional and have not considered buying annuities (58 %) say a recommendation from their financial professional or other trusted source would make them more likely to consider an annuity.
In addition to ownership, working with a financial professional can also bring greater awareness of what an annuity is. Thirty-six percent of adults who have never worked with a finance professional say they don’t know what an annuity is, compared to 8% of adults who currently work with a finance professional who said the same thing.
The top factors holding back those who are aware of annuities but have not considered purchasing one include lack of funds to purchase an annuity (39%), the costs and expenses associated with annuities (34%) and the risks received from pensions (22%). This group would be more likely to hold an annuity if they had better product knowledge and education (37%), lower upfront costs were involved (32%), and if a financial professional or trusted source recommended one (26%) .
“As market volatility and inflation continue to rise, it’s crucial for financial professionals and savers to debunk the myths and truly understand the benefits and functionality of annuities,” added Adam Politzer, Senior Vice President of Product Actuary at Athene. “Financial professionals and savers should know that the tax benefits, downside protection and growth potential they seek in a retirement savings vehicle can all be found in an annuity.”
To debunk myths and learn more about Athene USA’s annuity suite, retirement savers can visit https://www.athene.com/. Finance professionals can also learn more about Athene’s offerings at https://www.athene.com/producer.
Survey methodology
The survey was conducted for Athene by Wakefield Research among 1,000 nationally representative U.S. adults, ages 18 and older, between January 28 and February 7, 2022, using an invitation by email and an online survey. Data has been weighted to ensure an accurate representation of US adults ages 18 and older.
