Is a longevity policy worth the expense? The key factor, obviously, is your life expectancy. If you’re in good health and come from a long-lived family, a longevity policy could make a lot of sense. People are living longer and longer. The Internet has numerous life-expectancy calculators and tables for assessing your chances of making it into your eight and ninth decade.
But statistical life expectancy is only one factor. Even if the odds of living to be very old seem slim, it can pay to prepare for the possibility because the consequences of outliving your money are so negative.
For most people, the best option is to set retirement spending so that some resources will last past 85 or 90, and to make a limited investment in longevity insurance to help offset the damage inflation is likely to do to those assets. That way, most of your retirement money is available to be spent during the years you are most likely to live, but you can spend a relatively modest sum, perhaps 10% of your holdings, to get an income boost if you live longer than expected.
To find a longevity policy, talk to your insurance broker and search online for “longevity insurance,” “longevity annuity” and “deferred annuity.”
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