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The drawbacks of living “too long” – And how to ensure you have enough income for as long as you need it

The average life expectancy in the United States (in 2021) is just shy of 79 years old – up from 76 in the year 2000, and 68 in 1950. But this is only an average because there are currently close to a half-million people age 100 and older in the U.S., with that figure slated to grow eightfold by the year 2050.

If you’re in good health – and you have an income stream that you can count on for an indefinite period of time – that’s great! But that also puts you in the minority, because for many people, living “too long” increases the risk of running out of income when it is still needed.

Then what?

A Long Lifetime – The Multiplier of All Other Financial Risks

There are numerous risks that could have an impact on your retirement savings and income. These can include:

  • Volatile stock market
  • Low-interest rates
  • Inflation
  • High – and rising – healthcare costs
  • Long-term care expenses

While most people are familiar with these risks, there is another one that may also be present – and if it is, it could have a tremendous impact on your retirement savings and income. This is the risk of longevity.

Back in the early 1900s, most people only lived into their 40s. Over time, given advances in medical technology, people have been living longer – and today, it’s not uncommon for people to live well into their 80s, 90s, and beyond.

But, while living longer certainly has some nice benefits, it can also bring about some substantial financial challenges – one of these is having to face all of the other risks for a longer period of time.

Securing an Income for Life

Two of the most common retirement income streams today include an employer-sponsored pension and/or Social Security. Unfortunately, though, due in large part to the expense of keeping their pension plans going, more employers are doing away with traditional pensions and instead offering “defined contribution” plans like the 401(k).

But even though a traditional 401(k) can allow you to make pre-tax contributions and to generate tax-deferred growth, when it comes to converting your savings to income, it will be up to you – not your former employer – to make sure you have enough income to last throughout retirement.

Similarly, income from Social Security is also on somewhat shaky ground. When this program began back in the 1930s, there were far more workers paying into the system than there were retirees taking income out.

But today, it is feared that the number of retirees could soon surpass the number of workers who are paying into the program… and that won’t allow this “pay as you go” system to continue for very long.

So, how can you make sure that you’ll have income for life, no matter how long you need it?

One option is through an annuity.

These financial vehicles typically offer several different income options to choose from – one of them being lifetime, regardless of what happens in the stock market, interest rates, or the economy as a whole.

But before you go out and commit to an annuity, it is important to keep in mind that all annuities are not exactly the same – and it can be expensive to get out of an annuity if you realize too late that it may not provide you with the benefits that you are looking for.

Can an Annuity Solve Your Retirement Income Concerns?

There are literally hundreds of different annuities to choose from in the financial marketplace. Therefore, there are several factors to consider before you narrow down one that is right for you. These can include your age, risk tolerance, and time frame until retirement, as well as other benefits you may be looking for, such as tax-advantaged growth.

It can help if you work with an annuity specialist who can go out into the market and match up the best annuity for your particular needs. That’s what we do at Annuity Gator. If you’d like to set up a time to chat with an annuity specialist, give us a call at (888) 440-2468, or send us an email via our secure online contact form. We look forward to hearing from you and helping to provide you with a secure retirement.

The drawbacks of living “too long”

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