#1 Category: Personal and Family Risks—Longevity Risk
One of the biggest fears of most retirees is running out of money before they die. In fact, longevity risk is an even greater fear today, due to the fact that life expectancy has increased. So…How can you calculate the savings for your retirement when you don’t know how long you will actually live?
Living longer is not always fun and games. Retirees who manage their own funds for a significant period of time have to put some things in the balance. Being cautious and spending way too little might needlessly put an end to your lifestyle, but spending way too much increases the risk of running out of money.
A pension or an annuity can minimize some of the risk because they actually provide an income stream for life. However, there are certain downsides such as loss of control of assets, loss of ability to leave money to heirs, and cost. We know… Hard decisions should be easy, but, unfortunately, they aren’t.
However, it’s unwise for people to annuitize all of their assets, annuities should be considered in retirement planning. You should also investigate any company where you’d place an annuity. Check out the fees and be open minded! Try to consider other options, such as laddering bonds.
