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that is where you are missing the point. are you talking about only having ss or a pension and no savings providing an income stream at all ? then that isn't a savings short fall.
if we are talking living off ss and savings when you are retired then you draw off what you do have . that draw has to last you a lifetime .
you have money to eat and pay bills today as well as 30 years from now.
that money you were allocating for use age 80-95 is already there . if it isn't how the heck were you eating in 25 years or paying bills ?
if you are talking about somene living off just ss only or pension , then they have zero options for stretching or adding to a budget , it is what it is if you were not supplementing from savings for the rest of your life.
the longevity insuranace is for those who will be drawing some of their income off of what they did save over a lifetime.
this is why i keep saying not everything can or will apply to every situation.
i know folks who had savings but not enough to provide the cash flow they needed if they planned out to 95. those are the folks i am talking to.
planning out to 85 and getting the policy let them retire and make what they had work.
There are people who have no clue how they will eat and pay bills in 25 years. That's the whole point. There are people who have shortfalls in savings who don't have spare cash to buy thing like the longevity insurance you mentioned. Just don't have the money.
Two different issues are being mixed up here. One is not having enough to retire. Most folks, when thinking they have "enough," are probably figuring they have enough to get them through comfortably to 85. After all, how many people reach 86? I scan the obits daily in several local newspapers, and I can say not many.
It's the improbable stretch between 85 and 95 that the annuities are aimed at for many people who confidently initially retired. OMG, the thinking goes, what if I live another 10 years, what then? What if my spouse does too? IMO, that extra decade is the wild card, and it's the expensive decade b/c of healthcare and facilities. Those who planned super well self-insured to 100. Those who planned only adequately are going to either ignore the possibility of 10 more years, or search for a financial product to help them through.
In the back of my mind though is having known both an elderly doctor and dentist who had amassed a fortune and ran through the money in the nursing home. The despised gov't program ("redistribution") Medicaid to their rescue. They got to stay in their nice facility in their single rooms till they died around 90. So maybe being covered to only 85 will suffice for most.
In that scenario, what difference does it make if they run out of money at 82? 80? If they have no money at death, out is out, no matter when they died.
Well, I took out a very modest annuity in my 20s, believe it or not. It pays off when I turned 85, assuming I live that long. But as I said . . . I took it out in my 20s.
There are people who have no clue how they will eat and pay bills in 25 years. That's the whole point. There are people who have shortfalls in savings who don't have spare cash to buy thing like the longevity insurance you mentioned. Just don't have the money.
I'd like to see some hypothetical $ numbers and terms. It's useless to guess how many lattes and dinners out need to be cut in order to be able to afford it, or whether one will be reduced to cat food in so doing.
In that scenario, what difference does it make if they run out of money at 82? 80? If they have no money at death, out is out, no matter when they died.
That is IF they are in the nursing home at the age that they run out of money. Then they get to stay in, thanks to Medicaid. Medicaid does not pay for housing, utilities, and food in your own home. That's where the annuity comes in.
you usually have to contact an insurer who sells these to get a rate. they have to be bought and are not sold by salesman looking for a big commission.
lots of factors go in to the rate but compared to an immediate annuity the payout is quite large depending on ages and the cost way way lower.
That is IF they are in the nursing home at the age that they run out of money. Then they get to stay in, thanks to Medicaid. Medicaid does not pay for housing, utilities, and food in your own home. That's where the annuity comes in.
the biggest fear most women have is running out of money before they run out of time and end up being the proverbial bag lady.
80% of married men die married but 80% of married women die alone plus they live longer. pretty scarey stuff i would think for most women to have to plan for.
That is IF they are in the nursing home at the age that they run out of money. Then they get to stay in, thanks to Medicaid. Medicaid does not pay for housing, utilities, and food in your own home. That's where the annuity comes in.
Many people at 80+ do end up in an SNF. Not all, but many do. For many, round the clock home care is more expensive than a facility. Some conditions would be almost impossible to deal with inside a home. If the person requires significant in-home care, it's likely they are going to run up other substantial medical bills, and be wiped out anyway.
the fact is many of us will spend more time in retirement than we did working and god willing still be on our own.
for folks with pensions or ss that they can live in they are covered but the rest are on the yoyo plan.
you are on your own . it is going to be up to you to develop a safe ,secure consistant income that lasts as long as you do on the savings amount you managed to get together.
a 2 or 3% draw against your own savings amount should work using short term bonds , tips and that policy.
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