Longevity Annuity

Investors seem to be aware of the fact that they need to hedge longevity risk . In other words, people are concerned about the risk of outliving their assets. Sales of deferred fixed annuities increased 60% in 2008. While many different types of annuity products may be used to hedge longevity risk, the longevity annuity may be optimal if the sole concern is in fact avoiding a scenario in which one outlives their money: "A 60-year-old with a $1 million portfolio but no pension might allocate...

One of the nation's top financial planners is bearish on the recent upsurge in immediate annuity sales. An advocate of maintaining options and flexibility with retirement planning , this financial advisor sees immediate annuities as too restrictive for many financial plans. In contrast to the views on immediate annuities, longevity insurance or longevity annuities are discussed in light of the income and asset allocation options they create for retirees: "Of all the products that are out there...

It is a fact that people are living longer with each passing year. Longevity risk or the risk of outliving one's assets must be a fundamental consideration with any financial plan. Annuities can provide an effective hedge against longevity risk, and a longevity annuity can be especially useful in providing guaranteed lifetime income . Some facts and figures from the Prudential Insurance Company : Today, once an individual has reached age 65, he can expect to live, on average, 19 years or more...

A very good, balanced article about the longevity annuity --well worth the read. Consider that the annuity payout for a $50,000 longevity annuity purchased from MetLife by a 60 year old male is $56,106 per year. The payouts begin at age 85 and last for the lifetime of the contract holder . Tax considerations, estate planning and financial planning are discussed in the context of longevity annuities. Source: U.S. News and World Report Full Story