Increased Longevity and the Annuity Solution: How Retirement Policy Reforms Can Reduce Longevity Risk

David P. Richardson
Principal Research Fellow
TIAA-CREF Institute

Christopher S. Spence
Senior Policy Analyst
TIAA-CREF Government Relations

May 2010 |

Americans have experienced a steady increase in longevity over the last 100 years. While the benefits of increased longevity are clear, it also presents the country with a number of issues that require serious consideration, including ensuring access to a secure and lasting stream of income in retirement. Complicating the issue even further are the changes that have occurred in sources of retirement income: the future of Social Security is uncertain and many employers have replaced “traditional” defined benefit retirement plans with 401(k)-type plans that are more focused on accumulating wealth than providing retirement income. Without access to appropriate income options or guidance, participants run the risk of making uninformed decisions that could cause shortfalls in retirement.

There is an urgent need for products that will provide a stable and lasting income in retirement. Expanding the use of guaranteed lifetime annuities provides a logical and proven solution to diversifying, and effectively managing, many of the risks retirees currently bear. These products should play an important role in ensuring future generations of retirees will have an adequate and secure income in retirement, regardless of how long they live. This paper aims to highlight the important role of annuities in retirement planning and dispel some of their related myths and misconceptions.

© 2013 and prior years, Teachers Insurance and Annuity Association - College Retirement Equities Fund (TIAA-CREF), New York, NY 10017