WASHINGTON, Dec. 6, 2021 /PRNewswire/ — According to the newly released Alliance for Lifetime Income and CANNEX Protected Retirement Income and Planning Study, investors who were asked to build their own hypothetical $1 million retirement portfolio, said annuities and other income-producing assets were the most favored. The study is a joint research effort designed to better understand and forecast retirement income trends among investors and financial professionals.
When investors designed their $1 million portfolio, they allocated approximately 20% ($200,000) to dividend paying stocks, 14% (approximately $145,000) to real estate and 13% ($136,000) to annuities. Bank CDs (11%) and bonds (10%) round out the top five asset category choices, while “trending” investment opportunities such as SPACs and cryptocurrency fell to the bottom, with 3-4% of assets allocated to each.
The findings contradict the longstanding 60/40 strategy in which 60% of a retirement portfolio’s assets are invested in stocks, while the remaining 40% are invested in bonds—an approach originally designed to simultaneously grow assets and provide income.
“Investors showed a clear interest in building a retirement portfolio that was protected with an annuity,” said Jean Statler, CEO of the Alliance for Lifetime Income, a nonprofit consumer education organization. “We believe this is yet another blow to the outdated 60/40 portfolio mindset. Our research continues to show growing interest and significant demand from consumers for protected income, as more Americans become educated about the lifetime income, asset protection and other benefits of annuities. Unfortunately, the research also found that financial professionals continue to underestimate the intensity of consumer interest in annuities that provide steady income, which is important in volatile markets.”
An overwhelming majority of investors (85%) are interested in owning an annuity that guarantees lifetime income, or already own one. Of investors who are interested in owning an annuity with lifetime income, 49% are extremely interested. In stark contrast, the corollary study of financial professionals found just 18% believe their clients are extremely interested in annuities with lifetime income, indicating that there is a huge gap in what investors want and what advisors think they want. “If that gap continues to widen, financial professionals are likely to find that their clients will go elsewhere for advice,” Statler added.
The study was conducted by Artemis Strategy Group in August and September and includes surveys of 2,004 investors age 45-75. Simultaneously, 505 financial professionals were surveyed across the spectrum, from registered investment advisors to national wirehouses.
Read the entire Press Release: https://www.prnewswire.com/news-releases/in-a-1-million-retirement-income-portfolio-investors-choose-annuities-and-protection-over-traditional-6040-allocation-301437722.html
The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.
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