Thursday, August 12, 2010

Employees look to annuities for retirement security

Employee Benefit Adviser
August 10, 2010
MetLife IncImage via Wikipedia
With declining confidence in their retirement future — 53% of workers are concerned about outliving their retirement funds — a growing number of employees are interested in annuitizing their savings to maintain their income stream throughout their lives, reveals MetLife’s 8th Annual Employee Benefits Trends Study.
According to the study, 55% of respondents say they would prefer to receive part of their retirement savings for as long as they live rather than taking it as a lump-sum payment. Only 9% strongly disapprove of that option.
Specifically, four in ten (40%) would like to hear more about using annuities as part of their defined contribution plans, the study shows, and 44% would like their employers to offer an annuity option in their 401(k), 403(b) and/or 457 plans.
“To some extent, these findings buck conventional wisdom. We know from the annuity take-up rates that very few workers actually annuitize their savings at the point of retirement,” says Jody Strakosch, national director for MetLife’s Retirement Products group. “That said, we’ve long believed that the time would come when workers would shift their retirement focus from assets to income.”
An assortment of United States coins, includin...Image via WikipediaStrakosch believes it’s a paradigm shift that in the coming years will lead to more employers offering the opportunity for employees to annuitize at least a portion of their retirement savings. At present, the study reveals that very few companies offer annuities as either a defined contribution distribution option (16%) or as an IRA rollover option (13%). Among companies with 100 or more employees offering a 401(k) plan, of those companies that don’t currently offer annuities as a distribution option, only 20% are considering them.  However, only 14% would not consider offering them.
“With nearly five in ten workers interested in having their employers offer annuities and other lifelong income products, there may be an opportunity for more employers to give these options careful consideration,” says Strakosch.
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