Why Annuities Are Such a Tough Sell

Retirees are at more risk than ever of outliving their savings. People are living longer, and it's becoming harder to rely on either social security or traditional, defined-benefit pension plans as a safety net.

Annuities, insurance contracts that pay a guaranteed stream of income, can help. But they are a tough sell.

According to the Fidelity Research Institute, an affiliate of Fidelity Investments, there is "considerable academic research" showing that having a secure, guaranteed income stream has a positive impact on retirees' wellbeing -- both financially and psychologically. Yet most people would rather manage their retirement assets on their own as a lump sum than purchase an income annuity.

Fidelity wanted to find out why. Its recent survey of retirees and pre-retirees sheds light on the many reasons -- both emotional and logical -- that prevent people from investing in annuities ...