Understanding Private Sector Longevity Insurance Annuities
While all annuities provide retirees some longevity insurance, the term “longevity insurance annuity” refers specifically to deferred annuities that begin payment at an advanced age, such as age 82, which is a little less than the life expectancy at age 62 in the United States (Arias and Xu 2019). In the United States, women outnumber men by nearly two to one in the age group 82 and older (US Census Bureau 2020).
These annuities provide insurance against running out of money at advanced older ages. They may allow retirees to have riskier investment portfolios by providing a low-risk stream of income. The potential role for longevity insurance annuities is growing over time as new generations of retirees increasingly have shifted from defined benefit plans to defined contribution plans.