Most retirement plans have not incorporated the longevity risk. Mortality risk is a risk multiplier that acerbates other retirement risks. Without mitigating mortality risk, many middle class retirees could exhaust their 401(k)s and be left with Social Security and a little equity in their homes. The possibility is based on the sequence of returns, the math principle of withdrawing from your retirement plan in down markets. The sequence of returns during that period of the Great Recession left some retirees reeling with cash shortages and a future some are still recovering from. Living longer may affect the quality of life because medical bills and long term care costs will absorb discretionary dollars. 70% of seniors today use some long-term care assistance. Living longer will only compound the problem and the expense. If the baby boomer generation gets tight with their money, it could cause a rippling affect on the economy as spending grinds to a halt.  Inflation is a real and ever present danger to seniors. It doesn’t matter what the declared rate of the CPI is or any other inflation indicator, if it doesn’t include the commodities of life; it’s a worthless gauge. The purchasing power of your retirement   Read more…

There is no other investment or savings funding tool that can guarantee lifetime income except annuities. As an individual the average male lives 86.6 years and the average female lives 88.8 years. The surviving spouse in a marriage averages living to age 93.  87% of the time the surviving spouse is a female. Half of all Americans will live longer than those averages.  If the surviving spouse average is age 93 that’s 31 years from age 62 which is the starting age for many guaranteed lifetime annuities. So the average internal rate of return for lifetime annuities is benchmarked at age 62 for 31 years. Those returns could be somewhere around 3% net of all product expense loads. It could be 4%+  if those at age 93 live to age 100. How can annuity manufacturers guarantee lifetime income? The answer is mortality credits. The theory uses the law of large numbers and those who don’t survive the averages are credited to those who did survive the averages. Mortality credits are not correlated to the market returns like those of bonds and their credited interest or stocks and their dividends earnings. They’re based on surviving the odds. If Jeanne Calment owned   Read more…

The Guinness Book of World Records establishes an achievement based on documentation. Their documentation is rooted in a scientific process of collecting of data. Currently, Guinness has declared Jeanne Calment as the oldest person to ever live in modern times. But an Indonesian man named Mbah Gotho has Indonesian documentation that states he died at 146 years old. But that documentation is not acceptable to Guinness, so when and until creditable evidence emerges Jeanne is the longevity queen. But for billions of Christians around the world Methuselah has the record for the oldest living human of all time at 969 years old and its documentation is the Bible and more specifically the book of Genesis. Guinness doesn’t recognize Genesis, so Jeanne is still the poster child of human longevity and in comparison to Methuselah she was just a child at 122 years old. The living and reigning champion of the geriatric set is Jamaica’s Violet Brown at 117 years old. That makes her a centenarian teenager! But recently America’s “Old Suzannaâ€� Jones died at 116 years old and she was not only a centenarian teenager, she was a tri-centurion born in 1899  These may be outliers and anomalies in the   Read more…