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.”

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

The biggest detriment to selling annuities, though, is how the sale is framed to the prospective buyer. Upon retirement, the most likely offer will be to either completely annuitize or not. When presented with this “all or nothing option,” the study showed about half chose to annuitize. When given the choice to partially annuitize, the number choosing an annuity option jumped to 80 percent. Significantly, only 21 percent of the people opted for full annuitization. This suggests an “all-or-nothing” scenario; more than half the people who selected to fully annuitize do so begrudgingly.