Future Considerations

Investors concerned about outliving their money may be drawn to an investment vehicle known as a “longevity annuity.” Also known as a “deferred income annuity,” this investment requires a lump-sum payment in return for monthly lifetime income that begins at some future date. The payout, which typically begins at age 80 or so, is used as a supplemental retirement investment and helps hedge against the risk of outliving one’s money. If IRA funds are used to purchase a longevity annuity that meets certain IRS guidelines, up to $125,000 of its cost (or 25% of the account balance, whichever is less) will not be used to calculate minimum distributions that must be taken from a retirement account at age 70.5.