Everyone faces risk in their lives: market risk and inflation risk are often at the top of our list of fears about our economic future. Have you considered longevity risk?
Studies show that most "Boomers" underestimate their own longevity, thinking about the age at which their grandparents or parents left mortality. Yet with better health care, more focus on healthy living and avoiding foods and activities that hasten illness many will live much longer than they thought.
With longer lives the risks are 1) will I run out of money before I run out of time? and 2) what can happen that will open a large hole in my financial plan?
These two risks associated with longevity are solvable. All it takes is time and money.
No matter what you use for investments (real estate, stocks, bonds, mutual funds, your business) remember to include a method of guaranteeing an income stream that cannot be outlived. Accumulating wealth is important and yet counting on that investment to never fail in delivering a guaranteed income stream can be a mistake.
A guaranteed lifetime income can only be found in an insurance plan as old as the hills - a lifetime annuity based on longevity credits. You need to take a look.
Secondly, a long-term disability that requires assistance with the activities of daily living can rip a hole in an otherwise planned retirement scheme. While many of us will certainly live more years than our parents we cannot be sure that we will die with our boots on. Millions of people have blown through their retirement funds due to the $8,000-$12,000 per month cost of long-term care.
You must cover the longevity risk with a solid plan to have some kind of insurance policy. Make sure a disability doesn't open the valve on your retirement bucket of money and drain it dry. You need to take a look.
No comments:
Post a Comment