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Do Lifetime Guarantees Drive Better Outcomes?

Author

Matthew Drinkwater, Ph.D., FSRI, FLMI, AFSI, PCS
Corporate Vice President, Annuity and Retirement Income Research
LIMRA and LOMA
mdrinkwater@limra.com

Table 1. Proportion of Retirees in High-Confidence Group, by LGI Components and Wealth Segment

Percentage of retirees Percentage Assigned to “High Confidence” Group
All retirees Household Investable Assets
$100,000 to $499,999 $500,000 to $999,999 $1 million to $1.99 million $2 million or more
Social Security benefits make up:
Under 40% of LGI 0.25 0.35 0.27 0.37 0.38 0.46
40 to <65% of LGI 0.23 0.27 0.17 0.3 0.39 0.43
65 to 99% of LGI 0.22 0.23 0.14 0.21 0.37 0.43
100% of LGI 0.3 0.19 0.12 0.15 0.25 0.47
DB pension benefits make up:
None 0.41 0.2 0.13 0.17 0.29 0.42
Under 60% of LGI 0.36 0.27 0.16 0.29 0.36 0.47
60 to 100% of LGI 0.23 0.34 0.26 0.32 0.39 0.46
Annuities (lifetime) make up:
None 0.78 0.25 0.17 0.23 0.33 0.47
Any % of LGI 0.22 0.27 0.17 0.32 0.39 0.39
All retirees 1 0.26 0.17 0.25 0.34 0.45
Based on 2,438 retirees who received any combination of income from Social Security, direct benefit pensions, or annuities (lifetime-guaranteed income only). LGI = lifetime-guaranteed income.

Figure 2. Proportion of Retirees in High-Confidence Group, by LGI Components

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