Longevity Risk and Reward
Science has been making great strides lately lengthening our life spans to the point special considerations need to be made regarding the quality of life as we age. The experts say that very soon living to age 110 or more will be the norm. It is one thing to live that long. It’s quite another to really make the most of all this extra time.
Breakthroughs
Cambridge gerontologist Aubrey de Grey is involved in some amazing research right now. To dramatically extend life, de Grey is developing a therapy that kills cells that have lost the ability to divide. This allows only healthy cells to replenish the body.
“These therapies are going to be good enough to take middle age people, say people aged 60, and rejuvenate them thoroughly enough so they won’t be biologically 60 again until they are chronologically 90. That means we have essentially bought 30 years of time to figure out how to re-rejuvenate them when they are chronologically 90 so they won’t be biologically 60 for a third time until they are 120 or 150.”
More Time is a Good Thing, Right?
When planning for retirement it is important to consider all the risks associated with it. Inflation, health care costs, and market volatility are important but longevity is the overarching risk. The longer retirement lasts, the greater the chances that these other forms of risk will manifest. Increased longevity means more time for another financial crisis, more time for inflation to compound and increased chances for an expensive health problem. All these can combine to cause your retirement income to run out too soon.
Solutions
With these longer lifespans it’s important to create an income stream that you cannot outlive. One useful tool to accomplish this is an annuity. You are probably more familiar with these products than you think. Social Security is an annuity. A pension is a lifetime income annuity. Using annuities as part of your income strategy takes longevity risk off the table and can help eliminate other types of risk.
