As employment benefit pension plans continue to decline at fast pace, many Americans are turning to “longevity insurance” to restore some financial security to what are supposed to be their golden years. An article recently posted by Anne Tergesen gives some valuable insight into these private pension plans. Unlike an immediate annuity which starts issuing payments almost instantaneously, a longevity policy involves an upfront payment with a start date selected by the policyholder at some point in the future.
For an example of the differences, a 65 year old man paying $100,000 for an immediate fixed annuity can get $6,950 a year for life (according to ImmediateAnnuities.com). However, if he chose to put this money in a longevity policy at this same time with payments starting once he turns 85, then his annual payment will be $63,990 (according to New York Life). As with any retirement planning tool, it is important to balance your risk tolerance to your expected returns. This article highlights some important things to consider when deciding if these products can address your needs, so please read it by clicking on this link.