Browse the news below to learn about important developments shaping retirement.
Most reluctant to buy annuities for retirement
Chicago Tribune, November 17th, 2006
Among economists and academics, a
consensus is growing that annuitization--exchanging a lump sum of money
for a lifetime income stream--can go a long way toward helping provide
retirement security for millions of Americans.
But if annuitization is good for us, why do so few of us do it?
This question has been dubbed the "annuity puzzle," and a new study by
two college professors explores likely reasons, from cost to mistrust
of the insurance industry. The study also examines legislative
proposals to encourage annuitization by providing tax incentives for
buyers of so-called immediate annuities that pay an income for life.
Consumers have been cool to these annuities, which accounted for less
than $12 billion of the more than $212 billion in annuity sales last
year. Deferred annuities, in which earnings grow tax-deferred until
withdrawn, are more heavily marketed and rack up far more sales.
Deferred annuities offer the option to annuitize when you withdraw the
money, but only a small percentage of buyers do so.
Yet,
"economists have long been convinced that annuitization is the way to
go" to provide lifetime income security, said William Gentry, associate
professor of economics at Williams College and co-author of the study
with Casey Rothschild, an assistant professor at Middlebury College.
Read more of this article.
Anonymous comments are disabled
© 2004-2007 NewRetirement, LLC. All Rights Reserved.