Longevity Risk and Retirement Plans
There are many types of risk with which investors should deal with, such as inflation, economic, market risk and etc. One of them can threaten your retirement plan and it is called longevity risk.
The longer life span of people has its negative implications. Living longer means that you will need more money to sustain your living. Longevity risk concerns the fact that due to the longer longevity many investors have the potential of outliving their retirement plans. As a result, many people are worried about their retirement money and consider the longevity risk as the one in the top of the list.
Financial experts from the retirement planning field have noticed a trend toward the inability of some retirement plans to meet the needs of retirees due to their longer life spans. This problem has been around for some time and different strategies for curing this have been suggested.
Many experts recommend the keeping of part of the investment portfolio even after retirement so that you have some income from it to supplement your pension.
On the other hand, many retirees have embarked on the postponement of retirement in order to gain additional money for retirement years. Additionally, others have started part time jobs in order to be able to supplement their retirement resources.
Many complicated calculations are done in order to check for the ability of retirement money to finance retirement years. The construction of retirement plans should include the consideration of the time during which retirement funds should be available. This means that you should consider the age at which you are to retire and the years after you retire.
Many studies have shown that women enjoy higher longevity. Thus, women should pay special attention to fighting longevity risk.
Finally, most retirees prefer a more conservative investment approach. However, having in mind the longevity risk this may not be the recommended strategy due to such factors as inflation. Therefore, you should reconsider your retirement strategy in order to be able to provide resources for a peaceful spending of these years.
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