Summary
This technical report discusses the design and implementation of annuity trial periods, specifically focusing on the Income Test Drive (ITD) program introduced by TIAA in 2017. The ITD program allows participants to experience annuity-like payouts for up to two years before making a final decision on annuitization. The report outlines the behavioral interventions associated with the ITD, emphasizing how it aims to enhance consumer understanding of annuity products and the benefits of regular income streams. It details the structure of the ITD program, eligibility criteria, and the behavioral challenges faced by potential annuity buyers. The report also summarizes early participant behavior, noting that approximately half of the participants opted to annuitize after the trial period. Additionally, it addresses the implications of offering trial periods for fixed annuities and discusses the potential for increasing demand for lifetime income products through such interventions. The findings are contextualized within the broader landscape of retirement planning and annuitization decisions.
