If recent trends continue, the world’s population will experience further longevity gains as medical advances result in more and more cures for fatal diseases. In the United States, dramatic increases in life expectancy occurred during the 20th century, essentially matching the improvements that occurred over the previous 2000 years. Yet, despite the medical advances in preventing and curing diseases, essentially no progress has occurred in solving the underlying fundamental cause of death among the elderly, which simply stated, is the aging process.
This article summarizes a research study that analyzes changes in assumptions about longevity and mortality risk, which may translate into changes in retirement decisions. Individuals planning for financial security in retirement need to be cognizant of relevant life expectancies and survival probabilities. Since it greatly reduces the probability of outliving income, annuitization may make sense for at least a portion of financial assets.
