[matt_holden]

The unpopularity of annuities seems like a direct consequence of loss aversion, which says losses are more psychologically powerful than equivalent gains. [1]

If I trade $100k in savings for an annuity, I'm starting off at a deep "loss", which becomes a "gain" only at some point in the uncertain future. Not surprising that most people won't take that bet.

[1] https://en.wikipedia.org/wiki/Loss_aversion

[Jtsummers]

A lot of people also don't understand annuities. They don't understand how their bank (or whoever) can guarantee them a paycheck every year at a certain amount. It seems it's often not explained as a form of insurance.

[tim333]

Also I understand them but the rates seem a bit rubbish. I just got a quote for a 55 year old and they offered 3.7% (this is in the UK). For comparison you could buy rental property and get a yield like 6% plus capital appreciation. With property, you suddenly want a lump sum, you can sell or mortgage. With the annuity you are out of luck. Also the rent goes up with inflation, this annuity I think not.

[mattkrause]

Isn't there some counter-party risk that the bank (or whoever) might go under? With regular insurance, that's not really an issue--I'll just find another provider--but for an annuity, your money would be gone.

This risk also pretty hard to evaluate, as everyone seemed to discover around 2009.