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

The study explains some of the reasons behind this “annuitypuzzle.” For example, people are less likely to choose an annuityoption if they own a home, have kids and have a higher net worth.On the other hand, the study's researcher found that retirees whoare married and who have been shown mortality tables are morelikely to purchase an annuity.

The biggest detriment to selling annuities, though, is how thesale is framed to the prospective buyer. Upon retirement, the mostlikely offer will be to either completely annuitize or not. Whenpresented with this “all or nothing option,” the study showed abouthalf chose to annuitize. When given the choice to partiallyannuitize, the number choosing an annuity option jumped to 80percent. Significantly, only 21 percent of the people opted forfull annuitization. This suggests an “all-or-nothing” scenario;more than half the people who selected to fully annuitize do sobegrudgingly.