Skip to main content

Although our financial advisor partners are well aware of the benefits annuities can bring to certain client retirement portfolios, it’s important to realize that many people in America still do not understand them.


In fact, older Americans only received a score of 12% out of a possible 100% in a recent study called the “Retirement Income Literacy Study” conducted by the American College of Financial Services. Published in August of 2023, the study of nearly 4,000 Americans ages 50 to 75 showed that annuities ranked dead last: Respondents knew more about Medicare, life insurance and long-term care than annuities!


In another recent study, researchers from the TIAA Institute and Stanford University also surveyed adults about annuity literacy with the same dismal (and eye-opening) results. One of their multiple-choice questions was this: “Susan worries about living a long life and running out of money. What is the best way for her to address that possibility?” The answer options were as follows: a. Susan could buy an annuity; b. She could buy life insurance; c. There is nothing Susan can do; or d. I don’t know. Only around half of the surveyed adults chose correctly.


A senior research economist at the Center for Retirement Research at Boston College summed up the annuity awareness issue succinctly: “There is this question of why people don’t buy annuities. Part of it is that they don’t understand them,” said Gal Wettstein.


According to Boston College research, only about 10% of Americans own commercial annuities (commercial annuities being the ones provided by insurance companies). Buyers tend to be upper-middle class, and neither very rich nor poor.


This low adoption and low awareness about annuities indicates that more education seems to be in order, especially as many middle-class Americans have not saved enough money for retirement. June is Annuity Awareness Month, so now may be the perfect time to talk to your prospective and current clients about annuities.


One thing you can highlight in your communications is that annuities may help retirees generate reliable income to supplement the government annuity called Social Security, important since the average monthly Social Security benefit was only $1,907 as of January 2024. And supplementing Social Security may be even more imperative to retirees since the Social Security Trustees Report again just found that benefits will have to be cut in 2035 (one year later than announced prior) unless the program is changed.


Of course, not all annuities are alike, and at Quantum, we usually discuss fixed and fixed indexed annuities with our advisor partners. (We offer hundreds of annuities from dozens of insurance carriers.)   To help our advisor partners educate consumers, we’ve developed two whitepapers you can use, as well as a video here:


In conclusion, there is apparently a lot of room for growth, despite already exploding annuity sales. With the right product and the right client, annuities can offer another regular income stream in addition to Social Security which is guaranteed by the financial strength of the insurance company providing it.


Whether or not you are a current Quantum partner, if you are an independent financial advisor or insurance agent call us at 800.440.1088 to discuss annuities. Ask us for a sample case design to see how the latest annuity products stack up given current interest rates. We’d love to talk to you.