Why is it that so many people say they want to buy an annuity but few actually do? A new blog from the Center for Retirement Research at Boston College suggests that it’s not for the reasons you might think.

A news brief released by the center on Tuesday sets out to address what the authors call “the annuity puzzle”—the fact that so many retirement-age people seem willing to buy annuities while only about 12% do.

The blog, written by center-affiliated economists Karolos Arapakis and Gal Wettstein, is called “How Much Do People Value Annuities and Their Added Features?” It’s based on a recent paper they wrote called “Longevity Risk: An Essay.” That paper, in turn, was based on the results of a survey by Greenwald Research last June.

Greenwald, after talking to more than 1,200 people age 55 to 95 with more than $100,000 in savings, found that 76% of the respondents thought it was valuable to own a guaranteed lifetime income product. About half the respondents said they were willing to buy an annuity at the current market rates.

“The annuity puzzle is a longstanding question,” says the blog. “Since 1965, economists have argued that many individuals should annuitize at least some of their wealth in retirement. However, in the biennial Health and Retirement Study (HRS), a nationally representative survey of Americans over age 50 conducted by the University of Michigan, only 12% of households with financial assets over $100,000 receive any annuity income.” 

The easy answer is that annuities come with a lot of turnoffs. A common advisor objection is that these products are sold, not bought. They can tie up people’s money, come tangled up with high commissions, fees and front-end loads, and they tend to rise in price because only longer-living people tend to buy them. Also, people who want to leave their money to heirs can’t do it if the money is imprisoned behind an ironclad contract without survivor benefits.

The new Boston College brief, however, suggests there’s something more banal at work in clients’ reticence: The respondents don’t really know how to buy an annuity or know they exist in the first place. So the thoughts might be warm, but the behavior is skittish.

“Social psychology has long recognized ‘channel factors,’” the economists write, talking about people’s inability to follow through on intentions. “For example, a classic experiment found that giving students information on the importance of tetanus vaccines produced the intention to be inoculated. However, only a group of students who were given concrete plans for receiving the shot ended up getting vaccinated. This result, replicated many times since, led to the conclusion that intentions are insufficient to produce action on their own, but rather require specific step-by-step plans.

According to the Center of Retirement Research, what this means is that the desire to buy an annuity and the act of buying one have a frustrating layer of abstraction between them. “The results of the new survey and its randomized control trial described next are consistent with this social psychology intuition,” says the new blog.

It’s not even the price of the products holding customers back, the economists said.

“The [randomized control trial] elicited from each respondent how much guaranteed monthly income they would require in order to be willing to pay a $100,000 premium,” Arapakis and Wettstein write. “Roughly half of respondents’ required payments were lower than the payments they could have gotten from annuities sold on the market to customers with their own age and gender at the time the survey was fielded.

Other reasons people normally eschew annuities is that they think Social Security is going to do the job of giving them steady income. Or other times, people simply think they’re not going to live very long. But again, the center said these reasons aren’t as striking as the logistical ones for people’s aversion to the product.

The findings, they continue, “suggest that potentially aversive qualities of annuities, such as the fact that they cannot be bequeathed or that they tie up wealth in an illiquid form, have a negligible impact on the respondents’ willingness to annuitize.”

To put a finer point on it, they list clients’ warm feelings toward these products: 71% of the respondents agreed these products offer peace of mind; 61% said they offer long-term security; 76% said the products provide extra protection if you live a long time; and 66% said they protect investors against stock market swoons.