Would you like a big payment now, or smaller payments at regular intervals for many years? When that question was posed by researchers in the context of retirement benefits, a majority chose slow and steady.
In a recent study of employees with at least $100,000 in assets nearing retirement and retirees, the LIMRA Secure Retirement Institute found that a majority — 53% — say that they would prefer guaranteed lifetime income over a lump sum payment. Respondents had been posed with a hypothetical situation in which they could choose between guaranteed monthly payments of life of $660 or a lump sum payment of $120,000.
Why did those who chose slow and steady do so? Nearly 60% of those who preferred the guaranteed income said their choice was fueled by the expectation that they would live a long time after retiring. Almost half said that such an arrangement would give them peace of mind.
Two-thirds of those who said they would rather have a lump sum payment said they want to control their money. Nearly 40% of them said that the hypothetical monthly payment presented to them was too low. And almost 30% said that they do not trust that the monthly payments, though guaranteed, really would continue.
LIMRA adds that it also has found that in surveys of consumers, more than 75% said that guaranteed lifetime income would give them greater peace of mind.
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