Show Notes
Chris’s Summary
Jim and I use a Life Annuity Specialist article on pension risk transfer mortality models to examine longevity risk for individual retirees. These models weigh sub-ZIP codes, income, and over 200 socioeconomic factors, suggesting some retirees may live more than 10 years past age-65 life expectancy. We discuss why a household is a risk pool of one, why projections should reach well into the 90s, and why advocacy matters as the tax planning window closes.
Jim’s “Pithy” Summary
Chris and I dig into an article from Life Annuity Specialist, and no, this is not an annuity discussion. It covers a new approach to mortality tables that a consulting firm built to help insurers price pension risk transfers, and I’m not a fan of those, as you know. What amazed me was how granular it gets: sub-ZIP codes, pension size, blue-collar versus white-collar, and a model trained on millions of life years of data.
Here’s the thing, folks. The subset of the population this model says will live longer is pretty much those of you listening to this podcast. You VGers, you do-it-yourselfers, you’re more likely to have taken care of your health and followed what Dr. Phillip Snider shares about healthspan, not just lifespan. These risk tables let insurance companies handle that uncertainty because they’re spreading it across thousands of people, so no single long life throws them off. You don’t get that luxury. You’re a risk pool of one, a zebra on the Serengeti trying to survive outside the herd. You can pool longevity and cash flow through an annuity if you want, but you cannot pool your cognitive ability or your ability to avoid fraud.
Whether or not you ever buy a lifetime stream of guaranteed income to protect your Minimum Dignity Floor, that’s up to you. What we talk about in this episode is longevity risk that goes beyond outliving your money. Who is going to advocate for you at 85, 90, 95? Who updates your power of attorney, checks your beneficiaries, and looks out for the surviving spouse who was never into this stuff? As the tax planning window closes, the need for advocacy grows, and many of you are going to live a lot longer than you think.
The post Longevity Risk Beyond Money: EDU # 2638 appeared first on The Retirement and IRA Show.
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