The Role of Affect and Social Norms in Preferences for Guaranteed Income Streams in Retirement

June 2020

Even with all the theoretical reasons to purchase life annuities, few retirees do so. What role do emotions and social norms play in annuity product uptake?


Decumulation decisions require individuals to consider a range of issues, including not only financial outcomes, but also family needs and retirement goals. An underexplored factor in these decisions is the role of positive and negative affect—or, more explicitly, the emotional content of retirement messages and the emotions that consumers bring to the decisions. This paper describes a series of empirical analyses and experimental studies that explore the role of affect, as well as the use of social norms messaging, in encouraging interest in annuity uptake.

This study was presented at the June 25, 2020, TIAA Institute Fellows Symposium. To view additional research that was presented, go to the 2020 Fellows Symposium Overview.

Key Insights
Positive affect reliably and significantly predicts greater interest in annuity products.
Using a high social norms framing also significantly increases interest in annuities.
Individuals who are experiencing high levels of financial distress, regardless of household income, report more interest in lifetime annuities.
Interventions and messaging that account for these factors may help consumers make long-term financial decisions better aligned with their retirement goals.

The authors conducted four studies—one using real-world Internet discussion board data and three using online panel participants—to examine how emotions and social norms impact decumulation decisions.