Fighting Longevity Risk in Retirement

by | Jan 5, 2022 | Blog, Financial Planning

Today’s retiree is much different than yesterdays. Each year there are a variety of challenges that advisors and clients face as they plan for retirement income. Market volatility, political uncertainty, pandemics, tax management, and you name whatever else comes to mind. The fact is, no matter how hard you work and save – there will always be questions.

As we detailed in the summary page and will continue to through this series, we remain resolute to the fact that current market conditions have presented challenges for clients to navigate portfolios. When portfolio returns do not meet expectations, living costs increase, you live longer, or possibly your cash flows are different than projected – Longevity risk is something you must plan for.

Longevity risk for retirees refers to the possibility that one may outlive their money and may need to change their lifestyle in some form to continue to have adequate income.

 

Source: Greenwald & Associates, BlackRock Asset Retention Study, 2018

 

According to Blackrock’s asset retention study, retirees hold mixed feelings about spending down their assets in retirement. It is only natural to have reservations about spending vs. saving, as a working American I struggle with finding that balance sometimes and I have a monthly paycheck still.

Let’s dig more into types of retirement income and how each could have longevity risk associated with them. Topics to be covered:

 

Where is longevity risk located within your retirement income buckets?

How does today’s market environment impact that risk?

 

Read the full paper here

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