cbsnews.com
Annuities Surge Amid Economic Uncertainty: Fixed vs. Variable Options
Rising inflation and market uncertainty have driven increased interest in annuities, contracts providing guaranteed retirement income; fixed annuities offer the most protection against market crashes, while variable annuities carry more risk.
- What types of annuities offer the greatest protection against market crashes, and why are they becoming increasingly popular among retirees?
- Annuities, contracts between individuals and insurance companies offering guaranteed income, have surged due to economic uncertainty and inflation impacting retirees. Fixed annuities provide a set interest rate and payment, insulated from market fluctuations, while variable annuities offer investment options with market-related risks.
- How do different annuity payout options (lifetime income versus term) and payment structures (lump sum versus multiple premiums) affect an investor's risk and return?
- The rising popularity of annuities stems from anxieties about inflation, market crashes, and outliving savings, as revealed by a 2025 Allianz study showing 64% of respondents fearing outliving their funds. Fixed and indexed annuities offer security against market downturns, contrasting with variable annuities' market exposure.
- Considering the potential trade-off between risk and return in different annuity types, how can retirees best balance their need for secure income with the desire for growth to combat inflation?
- While fixed annuities offer guaranteed income regardless of market performance, potentially mitigating retirement income insecurity, their lower returns might not outpace inflation. Variable annuities, though riskier, offer higher potential returns but expose investors to market volatility. The choice depends on individual risk tolerance and financial goals.
Cognitive Concepts
Framing Bias
The article's framing is largely positive towards annuities, particularly fixed and fixed-indexed annuities. Headlines and subheadings emphasize the safety and security they offer during market downturns. While risks are mentioned, the overall tone leans towards promoting annuities as a solution, potentially overshadowing potential drawbacks or alternative approaches.
Language Bias
The article uses language that is generally neutral, but phrases such as "Boost your retirement funds with an annuity here" and "Annuity income can be a solution to look into" subtly promote annuities without explicit endorsement. The repeated focus on the "safety" and "certainty" of annuities also contributes to a positive framing.
Bias by Omission
The article focuses heavily on annuities as a solution to economic uncertainty in retirement, but omits discussion of other potential retirement income strategies, such as downsizing a home, part-time work, or relying more heavily on Social Security. While acknowledging limitations of space, a broader range of options would provide a more complete picture for readers.
False Dichotomy
The article presents a somewhat false dichotomy by framing annuities as a primary solution to the anxieties surrounding retirement income in an uncertain market, without fully exploring the trade-offs and risks involved compared to other strategies. The implication that annuities are the solution to 'running out of money' fears is an oversimplification.
Sustainable Development Goals
Annuities can help mitigate the risk of retirees running out of money in retirement, a significant contributor to poverty among seniors. The article highlights the growing fear of outliving savings and how annuities offer a solution to this problem, thereby potentially reducing poverty among older adults. The focus on fixed and indexed annuities further emphasizes the potential for reliable income streams regardless of market fluctuations.