How Younger Americans Differ in their Approach to Retirement

By Jim Poolman

Is there a silver-lining to all of the economic turmoil Americans have faced in the past few years? One could argue that it taught younger Americans an important lesson – save! A recent Wall Street Journal article underscores this point, noting that as their parents lost jobs and homes and delayed retirement, these children are—in turn—boosting savings, cutting spending, and planning for retirement.  According to a survey by TD Ameritrade, while 46% of people aged 48 to 66 have regular savings plans, the figure is nearly 60% for those aged 23 to 47.

What’s also interesting about this trend is the types of products younger people are tapping into to help them to save more.  They are not just putting all of their eggs in one basket (e.g., maxing out the 401(k)), but rather looking for products to help them to balance safety and reward.

A great example of this is the case of annuities.  Long thought to be products exclusive to those nearing or already in retirement, there’s been a marked shift in the demographics of annuity policyholders in recent years.  Indeed, a recent LIMRA study found that one in four annuities buyers were under 50 when they purchased their annuity.  What makes a product like a fixed indexed annuity so attractive to a younger consumer?

Besides providing tax-advantaged benefits and income that cannot be outlived, Sheryl Moore, President and CEO of and, summed up this mindset nicely when she wrote:  “I lost tons of money when the market collapsed in the 2000s. I didn’t even know that you could lose money in a 401(k); I never read the prospectus. It was only when I complained about my losses that my boss suggested an indexed annuity may be more appropriate for me, based on my risk tolerance. Wow. That would have been great information a couple of years prior.”  Ms. Moore bought her first annuity in her 20s.

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