Jack Marrion writes:
A recent study found that when retirees were essentially faced with a coin toss, where if it came up heads they’d win $100 and if it came up tails they’d lose $10, that half of the retirees wouldn’t take the bet—even though the upside is 10 to one. This has strong implications for fixed annuities. The first one is that a significant number of retirees won’t have anything to do with the stock market if they understand that money can be lost. The key here is the retiree understands that there is a risk of loss. You need to ask questions such as “If you had $100,000 in an investment and it was worth $80,000 tomorrow, what would you feel like doing?”
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