The Emperor of All Risks
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We aspire to live a long life. Indeed, a recent study out of Norway found that, on average Norwegians wish to live until age 91.
A Pew research Center study found that 68% of respondents indicated they would accept medical treatments that slow the ageing process and make it possible to live at least to 120.
An AIG survey found that 53% want to live to 100 – yet 51% were uncertain their savings will last. And, nearly six in 10 (59%) feared running out of money more than death.
A constellation of financial risks face retirees. Since the beginning of 2022, I’ve written a number of articles that explain why it is crucial for retirees, especially constrained investors, to be protected against risks that will reduce or even wipe out their retirement incomes. But because the consequences of leaving longevity unmanaged are likely to be the most devastating, advisors must act now to address it.
I don’t like to be critical of financial advisors, virtually all of whom I’ve know over my career I have found to be among the most caring and honorable people I’ve encountered. But there is a pervasive “blind spot” that afflicts a large segment of the advisor population that precludes them from ensuring their clients against longevity risk. This longevity blind spot is a cancer that, if not expunged, will consume their clients’ good will. Proactively addressing longevity risk is tantamount to buying a call option on future success.