Longevity Risk

The risk of outliving one's assets. In other words, the risk of running out of money during retirement. In most countries, average life expectancy has increased dramatically over the past several decades. Longer lifespans are somewhat of a mixed blessing because of the financial burden associated with more years of retirement. Individuals, insurance companies and governments are exposed to the financial pressures created by the need to finance increasing longevity. Longevity risk is a key challenge for many societies around the world.

Dramatic Changes in Retirement Landscape

The picture for near and current retirees has changed 180 degrees in the past couple of years. Questions such as where to retire and what do do during retirement are replaced with whether to retire and how to make sure one does not run out of money during retirement. Working longer, waiting to draw on Social Security , and understanding longevity risk are front and center for the vast majority of retirees. Decumulation or drawing sustainable income from accumulated financial assets is one of...

Glossary:

Key Phrases:

Read more about Dramatic Changes in Retirement Landscape
Log in to post comments

Key Phrases:

Glossary:

Key Phrases:

Australian Financial Services Executive Advocates Compulsory Annuitization

The head of an Australian financial service firm's life operations, Richard Howes, is an advocate of compulsory annuitization . Howes believes that 30 percent of retirement funding should be compulsorily assigned to guaranteed income streams--in other words to annuities. Howes also suggests that the relatively slow take-up of annuities in the Australian market is a result of investors who have been conditioned by a uninterrupted 20 year bull market in equities. Howes spells-out the case for...

Glossary:

Annuity

Annuitization

Compulsory Annuitization

Key Phrases:

Read more about Australian Financial Services Executive Advocates Compulsory Annuitization
Log in to post comments

Key Phrases:

Glossary:

Annuity

Annuitization

Compulsory Annuitization

Key Phrases:

Longevity Swap Market Developing Slowly

As reported earlier , a new derivatives market is evolving to deal with longevity risk. Longevity swaps allow corporations and other pension plans owners to offload the risk of their plan participants living longer than expected. The market for longevity swaps, however, has been developing very slowly. Only one deal has taken place this year. Industry participants note that there is a slight backlog of deals and that roughly a half dozen deals should take place during the remainder of the year...

Glossary:

Key Phrases:

Read more about Longevity Swap Market Developing Slowly
Log in to post comments

Key Phrases:

Glossary:

Key Phrases:

Consider Inflation Protected Immediate Annuities for Estate Planning

Financial planning and estate planning have been brutally difficult over the past decade. High levels of market volatility , the possibility of deflation , and now threats of inflation have complicated the financial lives of millions of people. Almost anyone in or nearing retirement is faced with incredibly complex decisions. If, for example, you retired in 2000 yet remained fully invested in the S&P 500 you would have watched well over a third of your retirement nest-egg evaporate. Do you...

Glossary: