Longevity Risk
The risk of outliving your savings because retirement lasts longer than planned.
Longevity risk is the possibility that you live longer than your money was planned to last. Because many people underestimate their lifespan, planning only to an 'average' age can leave a gap in later years.
Tools that provide guaranteed income for life — such as immediate annuities or annuities with income riders — can address longevity risk by paying as long as you live, with payments backed by the issuing insurer's claims-paying ability and not FDIC insured.
Example
A retiree who lives to 95 relies on a lifetime annuity income stream that keeps paying long after a fixed withdrawal plan might have run out.
This definition is for general educational purposes only and is not financial, tax, or legal advice. Tim Hartle is an independent insurance professional. Annuity guarantees are subject to the claims-paying ability of the issuing insurance company and are not FDIC insured. Rules and product features vary by situation and by state. Please consult a qualified advisor about your own circumstances.
Related Terms
Immediate Annuity
An annuity purchased with a lump sum that begins paying income almost right away.
Income Rider
An optional annuity feature that provides lifetime withdrawals without giving up access to the contract value.
Sequence-of-Returns Risk
The danger that poor investment returns early in retirement, combined with withdrawals, permanently shrink your savings.
Go Deeper
Want This Explained for Your Own Plan?
Schedule a free, no-pressure Retirement Income Review with Tim, or call (727) 692-5866.
Annuities are insurance contracts. Guarantees, including guaranteed lifetime income benefits where available, are subject to the claims-paying ability of the issuing insurance company. Product features, fees, withdrawal restrictions, and surrender charges vary by contract.