Who buys annuities? What is the average value of an annuity contact? How much incomes does the typical annuity investor earn? The Gallup polling organization conducts periodic surveys of non-qualified annuity owners across the country to identify these questions. Matching their findings with your particular situtation can serve as a good rule of thumb, helping you judge whether annuities are the right choice for you. Download the full Gallup Annuity Survey 2005 or browse the excerpts below.
Who Buys Annuities?
- The typical annuity owner is predominately middle-class, with an annual household income of $40,000-$75,000.
- 58% of annuity owners are retired and 35% are employed either full or part time.
- The average annuity first-purchase age is 50.
- The average annuity owner age is 66.
- 46% of annuity owners are college graduates.
- 56% of annuity owners are female, while 44% are male.
- Females are slightly more likely to own a fixed, as opposed to variable annuity.
Why Owners Bought An Annuity?
- 78% of annuity owners report buying the annuity as a source of retirement income.
- 83% of annuity owners report buying the annuity to ensure against they or their spouse outliving their life expectancy.
- 88% of annuity owners cite the tax advantages of annuities as strong reason for why they purchased them. 87% of annuity owners believe they've done a very good job at preparing for retirement, and most believe their funds to be sufficient.
- 49% of annuity owners are concerned that serious illness or nursing home care will bankrupt them in retirement. Many believe a deferred annuity covers them against this risk.
- 59% of annuity owners express little concern about having to cut back their standard of living during retirement.
Annuity Contract Statistics
- 43% of annuities are valued under $100,000.
- 51% of owners hold a fixed annuity while 49% hold a variable annuity.
- Younger investors, under the age of 64, are more likely to own a variable annuity.
Top Sources of Funds for Purchasing Annuities
- Savings or current income (over 50%)
- Proceeds from another investment
- An inheritance
- Sale of home of business
- Death benefit from life insurance policy
- Gift from a relative
- Employment bonus
Top Stated Uses of Annuity Income
- Cushion for outliving one's life expectancy
- To avoid being a financial burden on one's children
- Retirement savings
- Emergency fund for catastrophic illness
- Hedge against inflation and financial protection against other investing performing poorly
Top Stated Reasons for Buying an Annuity
- Tax advantages
- Safe purchase
- Good rate of return
- Long-term savings plan
- Lifetime income option
- Easy way to save
- Emergency fund
- Multiple withdrawal options
- Covers nursing home expenses
Top concerns of Annuity Investors
- Running out of money mid-retirement.
- The problem of figuring out how to maintain their standard of living during retirement.
- Leaving a surviving source without enough to make ends meet.
- Not being able to pay for a catastrophic medical condition.
- Not being able to pay for a nursing home.
Average Annuity Contract Value
A majority of annuity contracts are valued under $100,000.
First Annuity Purchase Age
Most investors purchase their first annuity before the age of 50. The average annuity first-purchase age is 50.
Average Annuity Owner Age
The average age of owners holding an annuity is 66. A large percent of annuity holders are over 70.
Common-Chosen Annuity Distribution Method
The average age owners withdraw money from their annuity is 64. By that age, most have never made a withdrawal.
Annuity Owner Employment Status
Most annuity owners are retired.
Annuity Owner Maritial Status
Most annuity owners are married.
Holdings Beyond Annuities
Most annuity owners hold supplemental investments, with individual retirement accounts and mutual funds being most common.
Other Annuity Facts
- Over 97% of variable annuities have no front-end load.
- A 65 year old today, has a 25% of living to age of 92.
- Females are more likely to over-estimate their life expectancy than males.
- Half of annuity owners underestimated their life expectancy by as much as 5 years.