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Longevity may put retirement plans at risk

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As Americans continue to live longer than their ancestors, the ways in which they plan for their future may be at risk, according to the Institutional Retirement Income Council. In 2007, Americans had reached a new record lifespan of 77.9 years, according to the Centers for Disease Control and Prevention.

When people purchase term life insurance policies they may only buy a 30-year plan because they assume they will not outlive it. However if they do, they will receive nothing for their years of investing, and be left to come up with alternative ways to pay for their end-of-life services.

"Unfortunately, most people do not know the probabilities for how long they will live and under-estimate the time," said Fred Reish, an IRIC member and a partner at Drinker Biddle & Reath. "As a result, they also under-estimate how long their retirement funds need to last, the lump sum amount they need and the rate they can safely use to withdraw funds from their retirement accounts."

Experts recommend purchasing annuities if people want to ensure that they will have a steady income throughout retirement, according to the IRIC.  

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