In the November 2013 issue of the AARP Bulletin, Jane Bryant Quinn’s article “Is an Annuity Right for You?” focuses on a choice among fixed, variable and indexed immediate annuities. She rightly suggests that immediate annuities represent another important source of lifetime income beyond Social Security and any pension (remember those) an investor might have.
Having priced, designed and even patented some annuity designs, I applaud the article and the AARP objective of educating members about these under-represented financial products. A quote from a paper from the Pension Research Council: “An enduring empirical puzzle in the economics literature is why individuals so rarely purchase annuities to insure against length-of-life uncertainty, despite the substantial value that annuities have been shown to provide in standard life cycle models.” – is the problem that AARP is addressing.
