Examining the Barriers to Annuity Ownership for Older Americans
The economic downturn caused by the COVID-19 pandemic has destabilized the financial situations of many households, and decisions about how to cope with unexpected expenses, such as whether to take out a loan or make a hardship withdrawal from a retirement account, are likely to have long-term consequences, particularly on retirement planning and preparedness.
Planning for and living in retirement entail many complex decisions. Long before the pandemic, the responsibility for retirement saving and planning had shifted from the employer to the individual. Many employers have switched from defined-benefit to defined-contribution retirement plans, which do not guarantee an income in retirement. Investment and retirement products have become more accessible and more complex, requiring that individuals possess financial knowledge to make informed decisions. Moreover, life expectancy has risen, so individuals must save more to prepare for longer retirements. In addition to having increased responsibility for planning, individuals face numerous risks in their retirement decisions, from ensuring that they will not outlive their savings to protecting their investments and anticipating unexpected expenses.