Optimal Finance Daily - Financial Independence and Money Advice 3169: What is Longevity Insurance? by Jeff Rose on Guaranteed Lifetime Income
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Jun 7, 2025 Dive into the essentials of longevity insurance, a strategy to ensure lifelong income for retirees. Discover how these plans work by delaying payouts to boost future earnings, offering a secure complement to traditional investments. The discussion also covers the benefits and trade-offs, such as upfront costs and lower returns. Learn how strategically blending longevity insurance with other income sources can enhance your retirement financial plan, ensuring stability in an era of increasing life expectancy.
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Longevity Insurance Basics
- Longevity insurance protects you from outliving your retirement savings by guaranteeing lifetime income starting at a chosen age.
- You pay a lump sum upfront and receive monthly payments for life once the payout age is reached.
Setting Up Longevity Insurance
- Transfer a lump sum from your retirement plan to set up longevity insurance.
- Choose the payout start age knowing earlier payments mean lower monthly amounts.
Customize Policy Features
- Consider adding inflation protection to increase payments over time despite initial lower payouts.
- Add a life insurance rider if worried about dying early to protect your heirs, but expect lower income payouts.