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It’s not just that retirees dislike annuities; it’s that they go out of their way to act on that dislike. For example, a study in the Journal of Public Education says that even when annuity is the default provision, people will go out of their way to fill out more paperwork to receive a lump sum payment that they would then have to invest themselves. That says a lot. In fact, only 10 percent of the people leaving their job after 65 pick the annuity option. Finance professors, who feel it is in the retiree’s best interest to choose an annuity, call this gap in behavior the “annuity puzzle.”

Christopher Carosa

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