Solving the Biggest Risk in Retirement
Your worst risk may also be your biggest blessing: a long life. Take some steps now to make sure you will have the income you need to last a lifetime.


You may have heard it: YOLO. It’s an abbreviation used by the youth, code for “you only live once.” It makes you wonder if older Romans once rolled their eyes as the kids yelled, “Carpe diem!”
Yet, in America, thanks to numerous advancements in medicine, public health and safety infrastructure, the cries of “life is too short” are somewhat lost for those in and approaching retirement, who are better off asking, “What about if life isn’t too short?”
When it comes to financially preparing for retirement, of course, we have many risks to address, such as long-term care risk, market risk, withdrawal rate risk, sequence of returns risk, mortality risk, inflation and deflation risks, regulatory risks, fluctuating tax risk. Health risks, in particular, can be life-changing as they affect your memory, mobility and basic functions, such as vision and hearing.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Longevity risk, however, is chief among all the risks, because it’s a risk multiplier. Think about it: The longer you live, the bigger all those other risks get. So, if you want your money to last as long as you do, you must do whatever you can to remove longevity risk.
Sure, you want to address each risk in its own fashion. That means looking at life insurance products with their death benefits to address the possibility of an early death or taking a look at market products that can help address inflation concerns. To tackle the risk of a long life, though, we need to look to products or strategies that offer consistent and reliable streams of income.
Unfortunately, most of the tools in the average retiree’s portfolio — stocks and bonds, mutual funds, money market accounts, real estate, gold and commodities — don’t guarantee income. What options offer guaranteed income?
- Social Security of course is one source. In a consumer survey for the Nationwide Retirement Institute, conducted online in February by The Harris Poll among 1,013 U.S. adults ages 50 or older who are retired or plan to retire in the next 10 years, over half of the respondents (55%) say Social Security will be their main source of retirement income. Considering the average monthly benefit will be $1,461 in 2019, according to the Social Security Administration, they may want to rethink that. And what happens if Social Security payments are reduced in the future?
- Pensions are another option, for public employees and the few remaining private sector employees who have them. Yet, it’s pretty clear that most retirees can no longer count on an employer-sponsored pension as a reliable income stream. Fewer companies are offering them, some have been mismanaged and others never fully recovered from economic downturns. Many union and public pension systems — whose employees have long been able to depend on these benefits — are facing daunting shortfalls.
- With Social Security and pensions’ futures looking cloudy, more pre-retirees and retirees are taking the reins and setting up their own income streams, using an emerging third option to help reduce their longevity risk: annuities.
The safest way to maximize happiness in retirement (besides keeping your sense of humor) is to minimize risk. If you’re approaching retirement — even if you’re a decade or more away — do some research, ask some questions and consider the value of the protected lifetime income offered by an annuity, such as:
- A lifetime income annuity (known as a single premium immediate annuity or SPIA);
- A deferred income annuity; and/or
- A lifetime income/withdrawal benefit rider attached to an annuity.
Before the mention of the word “annuities” makes you cringe, just know they tend to get a bad rap because people don’t know much about them or the different options available. All annuities are not created equal — and the ones that get it right are starting to receive positive attention from retirement professionals and investors alike due to the promise of lifetime income.
According to the Alliance for Lifetime Income, a nonprofit group that advocates for holistic retirement planning, annuities are the only solutions that combine growth potential, downside protection and a guaranteed income stream. And yet, the organization claims fewer than two out of five Americans (38%) have a pension or annuity to supplement their Social Security income in retirement. That’s too bad, when you know that researcher Roger Ibbotson’s projections show that including annuities in a portfolio instead of relying solely on traditional market products gives retirees a higher probability of success at having their money last as long as they do.
As the kids say, YOLO — but you may want to plan for it to be a good, long time, so you can do what you’d like for as long as you’d like. George Burns once said, “You can’t help getting older, but you don’t have to get old.” Good advice. Thanks, George.
Kim Franke-Folstad contributed to this article.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

David Braun is an Investment Adviser Representative and Insurance Professional at David Braun Financial & Insurance Services Inc. Braun has more than 25 years of experience in the financial industry, and holds Chartered Financial Consultant (ChFC), Certified Life Underwriter (CLU) and Life Underwriter Training Council Fellow (LUTCF) industry designations. Investment advisory services are offered through Resility Financial Inc., a Registered Investment Adviser. Insurance services are provided through David Braun Financial & Insurance Services Inc. CA #0678292
-
Seven Surprising Reasons Retirees Are Going Back to Work
Sure, money is a big reason to come out of retirement, but it's not the only reason retirees are doing it.
-
Dow Gains 617 Points as Rate Cuts Near: Stock Market Today
Wednesday's economic data didn't shift Wall Street's expectations that the Fed is preparing for a rate cut at next week's meeting.
-
Answers to Every Early Retiree's Questions This Year, From a Wealth Adviser
From how to retire in a crazy market to how much to withdraw and how to spend without feeling guilty, a financial pro shares the advice he's given this year.
-
I'm a Financial Adviser: You've Built Your Wealth, Now Make Sure Your Family Keeps It
The Great Wealth Transfer is well underway, yet too many families aren't ready. Here's how to bridge the generation gap that could threaten your legacy.
-
An Expert Guide to Outsmarting Inflation: Don't Let It Restrict Your Retirement
Inflation is often underestimated when estimating retirement income, education funding or investment returns. These strategies can help preserve your purchasing power and reduce your financial anxiety.
-
Your 401(k) Options Just Got More Complicated: Here's What You Need to Know
Private equity, real estate and expanded annuities are now options, but they are more complex, less flexible and more expensive to own.
-
I'm a Financial Planner: Here Are Five Phases of Retirement Planning You Have to Get Right
A solid retirement plan is a must, but you can't go halfway. Neglecting just one area of your plan could cause the whole thing to collapse.
-
Greed, Fear and Market Volatility: A Financial Adviser's Guide to Keeping Emotions Out of Investment Decisions
Don't panic! And don't be so confident in the stock market that you overlook risk. Instead, be logical. Your retirement security could depend on it.
-
Want a Financial Adviser Who Shares Your Faith? Look for One With a CKA Designation
Financial professionals with a Certified Kingdom Advisor certification are committed to integrating biblical principles with sound financial advice.
-
10 Ways to Stay Safe From Grandparent Scams and Other Fraud, Courtesy of a Financial Planner
Scams are increasingly hard to detect, and anyone can be fooled, from older people to educated professionals. Here are 10 ways to avoid becoming a victim.