Many of you have done all the right things for your health and can look forward to a long and healthy retirement. Bad news for your financial planner!
Why would I say such a horrible thing? Longevity means the nest egg needs to last longer. That could mean spending less each year and worries about running out of money.
An annuity product that has come along aims to alleviate that worry. Called the Longevity Annuity, this is almost like a super long term CD that pays a guaranteed income stream for life. Only that income stream starts later in retirement, between age 75 and 85.
Longevity annuities tend to have a higher rate of return than other types of annuities because, frankly, the insurance company is betting on not paying out as much because the life expectancy is much shorter when you start the income stream.
These products don’t exactly sell like hotcakes. This is because it’s hard to get people to part with their money for 20 years or so. Kind of like talking young people into putting money into a 401(k) without a loan provision. It’s hard to do things that mean giving up money now to provide it for your older self.
Also, this is not the only way to fund your old age. Homeowners with lots of equity could use a reverse mortgage or even sell their home to move into an assisted living environment that has more of a rental arrangement. You could save more and spend less during the early retirement years.
This newsletter isn’t meant to sell you on a product, only educate on what’s out there. For questions, contact me for an appointment.
