Annuity ownership increases retirement confidence

"It is crucial that advisors understand and provide correct information about the product and show, in a simple way, how annuities can address consumers' financial goals and fit into their portfolio," according to the report, which adds that it's essential to convey this information about annuities because:

• The average investment in annuities is arguably one of the highest one-time financial transactions consumers may make;
• Unlike most other financial products, some annuities come with early surrender penalties that make it difficult to retract the annuity purchase if the buyer decides he or she wants to make a change; and
• Annuities are meant to be long-term investments, whether intended for growth on a tax-deferred basis or to provide income generation for future decades.

"It is important that the retirement industry debunks the myths consumers may hear from the press or advisors who may not "like" annuities. This lack of annuity knowledge (including misinformation) keeps households unaware of the key benefits and, in some situations, perpetuates the misconceptions. The value of annuities should be transparent to investors, with clear expectations of when and how they should be used," the report says.

Advisors and brokers can take an active role in increasing demand for annuities. For instance, by providing tools and illustrations and exhibiting a positive attitude may motivate many individuals to take a second look at annuities. In addition, the industry can educate the press and public of the benefits of annuities through social media.