By Warren S. Hersch
Employer-provided retirement benefits are most commonly distributed to workers in the form of an annuity, according to a new report.
The Public Policy Institute of the American Association of Retired Persons, Washington, D.C., published this finding in a study, “Older Americans’ Ambivalence Toward Annuities.” The study examines the results of an AARP survey of older workers and retirees respecting their choices for distributing retirement income
. The survey polled 1,750 older workers ages 50 to 75 and 670 retired people ages 59 to 75.
The survey reveals that nearly 5 in 10 workers (48 percent) plan to receive an annuity, either one purchased from a life insurer or through an employer-provided pension plan. And nearly 4 in 10 (38 percent) expect to receive a life annuity, the survey says.
Additionally, nearly three in four workers (74 percent) are receiving, or expect to receive, income from an annuity
. And six in ten (63 percent) are receiving income from a life annuity.
Three in ten (30 percent) workers and four in ten (41percent) retires with a choice of income distribution options intend to choose, or already have chosen, an annuity, the survey reveals.
Of workers with a 401(k)-type plan who are in a position to choose, 31 percent and 25 percent plan to elect a life annuity. Among retirees, 18 percent plan to elect or have elected a series of regularly scheduled payments.
When respondents were asked what features about annuities are “very” or “somewhat” convincing reasons for buying an annuity, 82.3% say that annuities “help you manage your budget because you get a predictable amount of money each month.”
Similarly high percentages of respondents cite the fact that annuities: (1) offer “peace of mind because the payments will continue as long as you live” (81.6 percent of respondents); (2) “ensure that your monthly income will not fall, even there is a large drop in the market” (80 percent); can help you remain independent because the money will never run out (76.8 percent); and (4) offer certainty in respect to the rate of return (75.5 percent).
Originally published on LifeHealthPro.com