Workers who are about to retire often feel a mix of joy, uncertainty and fear. But one group of older Americans feels more optimistic about their golden years thanks to a key asset they own.
Around 76% of Americans between the ages of 45 and 60 who own annuities are confident they will be able to retire when they want, according to a recent Nationwide survey of around 700 respondents who are not retired and who have an income of at least $100,000 and assets worth at least $150,000.
By comparison, just 49% of those who do not own an annuity feel similarly assured about being able to retire on their own timetable.
Some bad news also lurks in Nationwide’s findings: Regardless of whether they own an annuity, the age investors plan on retiring has shifted forward since 2023. On average, survey respondents now expect to retire at 64.3, six months later than in 2023, when the average age was 63.7.
The findings reveal a complex reality facing today’s pre-retirees: Those with annuities feel more secure about their retirement timeline, yet everyone is pushing back their target retirement date regardless of their financial particulars.
The confidence gap between annuity owners and non-owners stems from the peace of mind annuities provide. In a summary of the study findings, Rona Guymon, senior vice president of Nationwide Annuity Distribution, says:
“It’s not surprising to see annuity owners feeling confident in their ability to retire, particularly because annuities are one of the only investment products that can provide guaranteed income for life no matter how long someone lives and regardless of the economic environment.”
In fact, a separate Greenwald Research survey of 1,000 consumers between the ages of 50 and 75 found that respondents have more faith in the guaranteed payment from an annuity than they do in their Social Security benefit.
While 70% of consumers said they were confident they would receive annuity income payments as promised, 61% said the same about their full Social Security benefit.
The recognition of the potential value of an annuity appears to be growing. In the Nationwide survey, 31% of investors who have never bought an annuity said they are considering such a purchase today. In 2023, just 5% expressed such interest.
In the summary of Nationwide’s findings, Guymon says the shift in sentiment toward annuities is a result of the fact that consumers today are better educated about the product:
“For years, misinformation and misinterpretations have plagued annuities, but as advisors have stuck with fact-based messages to dispel those myths, we’ve seen sentiment start to change.”
Today’s investors also are increasingly turning to professionals for overall financial guidance. Almost half (48%) of investors are now working with a paid financial professional, up from 36% in 2023.
Those who work with a financial professional today are more likely to have discussed annuities than consumers of the past. Today, 78% have had such talks with their advisor, versus 66% in 2023.
About 55% of survey respondents also report that their financial advisors view annuities positively. That compares to 39% who said the same in 2023.
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