On average, women live longer and earn less than men. Retirement income usually significantly decreases once husbands pass away. This means that women are more likely to outlive their retirement assets.
How could they manage their longevity risks? Purchasing life annuity seems a good way to mitigate this risk. But the premium for annuity might be unattractive because insurance companies have to correct more in order to manage their risk at very high age. Some approaches for pooling longevity risk were discussed in the mentioned article.
1. Risk-pooling association
2. Transfer defined contribution plan to defined benefit plan at retirement age through employers
3. Purchase supplemental annuities directly from Social Security Administration
4. Transfer defined contribution pension to purchase supplemental annuities through Social Security Administration.
"Evaluation of Approaches to Reducing Women’s Longevity Risks" by Beverly J Orth, Monographs, Jan.2008
Category: Funding longer lives: Longevity risk