We plan for everything, from weddings to vacations to our children’s college tuition, but nothing takes quite as long to plan as retirement. Still, there’s one thing most retirement plans neglect to account for: the possibility of living a very long life. While that might sound like good news (and it is!), living longer brings with it a financial complication known as longevity risk — the risk of outliving your money.

What Is Longevity Risk?

Longevity risk is the possibility that your retirement savings won’t last as long as you do. It’s a challenge that’s grown more pressing as life expectancy has increased. In fact, more retirees than ever are living well into their 90s and beyond. That’s potentially 30 or more years of retirement to fund.

Many traditional retirement plans underestimate this. They’re built around assumptions of steady growth or optimistic market projections. But the reality is: the longer you live, the more likely you are to experience market downturns, rising healthcare costs, inflation, and unexpected expenses. Without a plan to guarantee income for life, you’re left vulnerable.

This risk is easy to overlook because it doesn’t feel immediate. But it’s precisely that delay that makes it so dangerous. And since no one knows how long they’ll live, guessing wrong can have serious consequences.

A long life is a blessing. Annuities make sure it’s a financially secure one.

The Role of Annuities in Combating Longevity Risk

Annuities are one of the only financial products specifically designed to address this issue. A properly structured annuity can provide income that lasts as long as you do, no matter how long that hopefully may be.

By placing some of your savings into an annuity, you know that that stream of income will continue, no matter how the markets perform or how long you live. That security is not just financial — it’s emotional. It removes the fear of outliving your resources and allows you to enjoy retirement to its fullest.

The longer you live, the more your retirement plan needs to do. Don’t let longevity risk catch you off guard.

Real-World Perspectives

Imagine two retirees, both with $750,000 in savings. One chooses to invest everything in the market, withdrawing 4% per year. The other uses $250,000 to purchase an annuity that provides a guaranteed lifetime income and invests the rest. If both live to age 95, who’s more likely to run out of money?

In most cases, it’s the first retiree. Market returns, inflation, and withdrawal timing have the potential to erode that portfolio over time. The second retiree, however, will enjoy a baseline of guaranteed income and can manage the rest of their portfolio more flexibly.

A Smarter Kind of Safety Net

Annuities aren’t a one-size-fits-all solution. But for many retirees, they’re an essential part of a comprehensive plan — especially when longevity is factored in. Think of them as the insurance policy for your income: you hope you never need to rely on it completely, but you’re grateful it’s there.

A long life is a gift. With the right financial strategy — including annuities — you can turn that gift into a long, secure, and fulfilling retirement. Don’t let the retirement threat nobody talks about catch you off guard. Plan smart. Plan for life.

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