longevity annuity
An annuity that begins payments at an advanced age — providing insurance against outliving assets.
Example
“The longevity annuity starting at 85 guaranteed income even if other assets were depleted.”
Memory Tip
LONGEVITY — insurance against living too long. Starts late, costs less.
Why It Matters
Longevity annuities address one of the biggest retirement fears: running out of money before you die. By converting a portion of your savings into guaranteed lifetime income starting at an advanced age, you create a safety net that protects your later years when healthcare costs may be highest and you have limited time to recover from market downturns.
Common Misconception
Many people believe longevity annuities are a waste of money because they worry about dying before payments begin. However, these annuities are designed specifically for people who live into their 80s and 90s, and the peace of mind from guaranteed income in those years often outweighs the risk of not living long enough to collect.
In Practice
A 65-year-old with $500,000 in retirement savings might invest $100,000 in a longevity annuity that begins payments at age 85. For the next 20 years, that person lives off their remaining assets and other income sources. At age 85, the annuity begins paying approximately $1,000 to $1,500 per month for life, ensuring they have dependable income throughout their most vulnerable years regardless of market performance.
Etymology
Modern insurance product — a QLAC (Qualified Longevity Annuity Contract) starting at 85.
Common Misspellings
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Related Terms
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