A longevity risk is any potential risk attached to the increasing life
expectancy of pensioners and policy holders, which can eventually
result in higher pay-out ratios than expected for many pension funds
and insurance companies.One important risk to individuals who are
spending down savings is that they will live longer than expected and
thus exhaust their savings, dying in poverty or burdening relatives.
This is also referred to as "outliving one's savings" or "outliving
one's assets".Individuals often underestimate longevity risk. In the
United States, most retirees do not expect to live past 85, but this
is in fact the median conditional life expectancy for men at 65 (half
of 65-year-old men will live to 85 or older, and more women will).The
collapse in returns on government bonds is taking place against the
backdrop of a protracted fall in returns for other core assets such as
blue chip stocks, and, more importantly, a silent demographic shock.
Factoring in the corresponding longevity risk, pension premiums could
be raised significantly while disposable incomes stagnate and
employees work longer years before retiring.
expectancy of pensioners and policy holders, which can eventually
result in higher pay-out ratios than expected for many pension funds
and insurance companies.One important risk to individuals who are
spending down savings is that they will live longer than expected and
thus exhaust their savings, dying in poverty or burdening relatives.
This is also referred to as "outliving one's savings" or "outliving
one's assets".Individuals often underestimate longevity risk. In the
United States, most retirees do not expect to live past 85, but this
is in fact the median conditional life expectancy for men at 65 (half
of 65-year-old men will live to 85 or older, and more women will).The
collapse in returns on government bonds is taking place against the
backdrop of a protracted fall in returns for other core assets such as
blue chip stocks, and, more importantly, a silent demographic shock.
Factoring in the corresponding longevity risk, pension premiums could
be raised significantly while disposable incomes stagnate and
employees work longer years before retiring.
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