How Can We Realize the Value That Annuities Offer in a 401(k) World?

IB#16-12

The brief’s key findings are:

  • A growing number of people are entering retirement with more 401(k) savings and less annuity income from Social Security and traditional pensions.
  • Annuities assure a lifelong income stream and – compared to other draw-down options – can provide attractive payouts, which can help cover late-life health costs.
  • But few individuals buy annuities, partly due to behavioral barriers such as the complexity of valuing the product and the way that draw-down options are framed.
  • Options for overcoming these barriers include:
    • educating individuals to focus more on the income they can draw from their nest egg, rather than its size; and
    • automatically putting a portion of 401(k) assets in an annuity, perhaps an Advanced Life Deferred Annuity that kicks in later in retirement.

The CRR wants to hear from our website users like you. Would be you willing to take a short survey?

Yes, take me to it.       No, thanks.      Not now, but ask me later.