Longevity Risk: How to Prepare Your Finances for a Longer Life Expectancy

When it comes to retirement planning, much of the focus usually rests on the actions you have to take to prepare a nest egg for your golden years. But what if your retirement savings run out before you do? This is where the concept of longevity risk comes into play.

Longevity risk is a growing concern as life expectancies in certain countries and regions continue to rise. Let’s explore the idea that you may outlive your retirement savings, why that matters, and how it can impact your ongoing attempts at building a retirement plan. Most importantly, we’ll discuss various strategies and solutions you can use to manage the risk and create a secure retirement even if you live to 100.

What is Longevity Risk and Why Should You Care?

Longevity risk refers to the possibility that your retirement funds may not be sufficient to cover all the years you live. Government data shows that residents of several U.S. states are living well into their late 70s and early 80s on average. Considering that most people retire around their mid-60s, that’s quite a few years to pay for.

Understanding Longevity Risk

When looking at this kind of risk, it’s important to take into account several…