2-minute article

Help your clients overcome behavioral biases about annuities

In a survey, 83 percent of respondents agree that guaranteed monthly payments gives them a feeling of financial security. And although annuities are one of the best ways to guarantee a lifetime income, only 12 percent* of working-aged Americans had purchased one.

Meanwhile, ensuring the type of guaranteed income an annuity can provide has never been more important. The average 65-year-old American can expect to live for about 19 more years. And many are concerned about having enough savings to cover those years. About 49 percent of Americans not yet claiming Social Security retirement benefits worry that they will outlive their savings.

The fact that many consumers do not purchase annuities when it is in their rational self-interest to do so is called the "annuity puzzle." Athene realized this puzzle was interfering with consumers' ability to plan for a financially secure retirement, so we set out to find out why.

Athene commissioned a review of biases from two experts in judgment and decision making at UCLA Anderson School of Management regarding this annuity puzzle. Their review identified 10 biases that keep consumers from purchasing annuities — ranging from fear of mortality to lack of financial confidence. Paired with the biases are solutions you can implement to help your clients overcome them.

Being aware of the behavioral tendencies that can come into play during the financial planning process can help put you and your clients on the path toward making smarter financial decisions together.

This information is brought to you by Athene — where innovative annuity solutions are powered by unconventional thinking.