Immediate Annuities Favored by Retirement Professionals—RIR Poll
June 22, 2008
Immediate annuities are the most popular retirement income strategy among retirement industry executives and managers, or so a recent online reader poll conducted by Retirement Income Reporter magazine suggests.
In a poll in early June, the SourceMedia publication asked subscribers to its weekly e-newsletter, “If your 65-year-old mother needed to draw an income from $500,000 in savings, which strategy would you consider first?”
Forty-one percent of respondents said they would use half the assets to buy a single premium immediate annuity (SPIA) and would invest the other $250,000 in a balanced index fund.
One-fourth of respondents (25%) said they would first consider a variable annuity with a 5% guaranteed lifetime withdrawal benefit (GLWB) as the primary retirement income strategy.
One in five (20%) would consider a ladder of five-year immediate and deferred fixed annuities, and 13% would take systematic withdrawals from a balanced mutual fund portfolio to produce retirement income.
The results of the poll were surprising, said RIR editor Kerry Pechter, because sales of variable annuities with GLWBs tend to dwarf sales of SPIAs.
“The survey sample is too small, and our readership too diverse, to justify any definitive interpretation,” Pechter said. “But the results are consistent with what many retirement professionals say privately.”
The poll’s findings were based on 84 responses from readers of RIR’s weekly e-newsletter, which more than 11,000 executives, managers and others in the insurance, annuity, and retirement industry receive. During the two weeks when the poll was posted on the RIR website, an average of 1,809 of the recipients of the newsletter opened it each week. Just over 4.6% of those who opened their e-newsletters voted in the poll.
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