An Op-Ed, “Paying for Old Age” in the NY Times on February 25, 2011, reminded me of a phone call I received about 10 years ago from a conservative think tank, asking me whether the private insurance industry had enough capital to underwrite payout annuities if Social Security were privatized.

This Op-Ed by Henry T.C. Hu and Terrance Odean, professors at the University of Texas and the University of California at Berkeley, respectively, argues for government-issued inflation adjusted payout annuities.

Last year, in response to a Request for Information by the US Departments of Labor and Treasury on developing an approach to including annuities in retirement plans, there were papers galore on the efficacy of these forms of annuities.

So whether you’re conservative or liberal, or favor private vs. government solutions, it seems that everyone agrees that what the country needs, like a good 10 cent cigar, is a payout annuity and one that provides COLA adjusted lifetime income. That form of annuity does exist, and is offered by a few top life insurance companies. But with relatively no sales.

So, how can something in such great demand by academics and think tanks be so unpopular in the market place? Why is there such a disconnect?

Well, I’ll be discussing the technical issue of the role of payout annuities in future blogs, but for now, suffice it to say that while lack of sales success is partly a design, sales and marketing issue, it’s mostly about establishing the right connections with the consumer and aligning a product/solution with his/her needs. That’s what we’re working on at

Yes, whether you’re the federal government, a large 401(k) provider, or a life insurance company, you can’t expect to build it and “they will come”. It has to fit, and it has to be properly priced and marketed.

As an actuary, I’ve seen too many elegant designs that failed in the marketplace because the consumer wasn’t interested or didn’t understand what was being offered, as well as many designs that succeeded in the marketplace only because the sellers were very good at selling them.

I’ll have more to say about this in future editions of this blog.

Jerry Golden
Golden Retirement, LLC