Episode 322: New Study: Retirees with Annuities Spend MORE than Those Who Rely on Investments Alone

David McKnight looks at a recent study on retirees that seems to tell a different story compared to what many people in the U.S. tend to believe.  Americans often view guaranteed lifetime income annuities skeptically – they’re perceived as a drag on the growth of their stock market portfolio. According to the study by retirement researchers David Blanchett and Michael Finke, retirees with guaranteed lifetime income spend about twice as much as their counterparts who rely on stocks and bonds alone for income in retirement. Those who rely purely on investments alone in retirement end up spending less because they fear running out of money in advance of life expectancy. David explains that “retirees with annuities spend more, not because they are wealthier, but because they have a form of wealth – a guaranteed income – that encourages them to spend.” Comparing two couples, a risk-averse couple with a risk-tolerant couple, Blanchett and Finke’s study found a 1.1% difference in them taking...