Consumers are clamoring for guaranteed income products, according to a recent report from the group representing annuity providers.
Three in four consumers ages 35 to 44 would be more interested in a guaranteed lifetime income product than in a non-guaranteed alternative — even if they’re not able to access the principal investment, according to the Insured Retirement Institute. IRI members account for 90% of annuity assets in the U.S.
The group suggests that both retirement savers and financial advisors are increasingly interested in annuities due to concerns about the solvency of the Social Security system as well as escalating healthcare costs.
IRI also touts guaranteed income products as “a key component to managing longevity risk” as longevity in the U.S. has increased while the ability to rely on traditional pension plans declines. For a couple in the U.S. aged 65, there’s currently a 50% chance at least one will live to 92 and a 25% chance they will live to 97, according to Society of Actuaries data cited by IRI.
At the same time, only around 16% of private-sector workers can currently tap a traditional pension, down from 17% in 2018 and 18% in 2017, according to the Bureau of Labor Statistics.
Meanwhile, 10,000 baby boomers will turn 65 every day for the next 13 years, according to Pew Research Center estimates cited by IRI.
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