Recall the primary goal of retirement investing: do not save so little that you outlive your savings. This is particularly important when the U.S. life expectancy continues to increase due to advances in medicine. Properly constructed, an annuity ensures that you will be able to afford a continuing care contract and any ancillary costs for the rest of your life. When you purchase an annuity, you trade off your mortality risk for a fixed dollar amount. The annuity issuer spreads longevity risk across a large population. If you pass away earlier than annuity tables predict, then you effectively forfeit the remainder (purchase price minus sums paid) to the issuer of the annuity. However, if you live longer than the annuity population’s average, you benefit from the annuity. Regardless, you have peace of mind and ensure that you will not be a burden to your children. Continue reading Investing for Retirement: Annuities