Insight: THE IMPORTANT ROLE OF FAIRNESS IN CHOOSING ANNUITIES
By Linda S. Jamison
IDEAS IN THIS INSIGHT YOU CAN PUT INTO ACTION
As retirees make decisions on how to spend down their assets, or decumulate, they face the trade-off of wanting to maintain their quality of life against the uncertainty of how long they will live. Suzanne B. Shu, Robert Zeithammer, and John W. Payne’s article examines why the demand for annuities is so low, although economic data support the benefits of annuities. Shu and colleagues undertake two studies to find reasons for this puzzling behavior. They contend that, although most of the study respondents replied that they dislike annuities, they are more inclined to have a positive opinion about them when they believe that annuity products are fair. The article discusses how the perception of fairness can guide financial professionals’ advice for consumers on the best way to decumulate their assets.
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About the Author:
Linda Jamison is an author, public speaker, and consultant who has served in senior executive positions in the US government, including in the White House. She has worked at the United Nations and was a senior leader with the Center for Strategic and International Studies, where she was the founding dean of an international leadership academy. Jamison has trained and advised policymakers and political leaders in the art and practice of leadership both in the United States and abroad. She has a master’s degree from American University in Washington, DC, and a bachelor’s degree from the University of Denver.