It was noted that no longevity annuity on the market is indexed for inflation to protect purchasers in case inflation soars during their retirement. But that is a feature that could legally be added.
Treasury’s Iwry: Simplicity Key To Popularizing Lifetime Income
November 6, 2014
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The first order of business is to establish what a longevity annuity is. It is insurance against outliving one's assets. It is not an investment. By the latter I mean that one should fund the annuity with the expectation one may never collect a dime on it. That makes the premium cheap enough to consider as insurance. Once the customer demands that he doesn't lose "the investment" then the price has to rise so high he doesn't want it at all. He's got to get it into his head that's he's hedging, not speculating, with this piece of the retirement solution. By design a true hedge is expected to show a small loss. Only if something else in the portfolio goes badly (like the owner lives a very long time) does the hedge show a gain. But the expect ion should be like his homeowner's insurance - paying a premium every year to protect and not care about the "loss" on the insurance "investment."