We have to take longevity risk off the table

“The longer you live, the more likely you are to be impacted by market crashes, the more likely you are to one day need long-term care, the more likely you are to run out of money,” said Tom Hegna, in a conversation we shared at NAILBA 33, being held this week in Hollywood, Florida.

I get the same reaction each time I talk (or rather, listen) to Hegna: Initially, it’s one of fear, but then I realize what he’s telling me is the antidote to fear. Hegna, a former First Vice President at New York Life, retired Lieutenant Colonel, and economist is one of those straight-shooters whose words can feel like a gut punch, but eventually his words are a wakeup call.

“We have to take longevity risk off the table. Longevity risk is the number one risk in retirement,” Hegna said.

“Tom, how do we get that done?” I asked.

“Social Security can do it,” said Hegna. “A pension can do it as well. Also, you can go with an annuity from an insurance company to get that longevity risk off the table. People think annuities are bad. That’s not the case.”

Hegna added that consumers are “fed this information by the likes of Dave Ramsey and Suze Orman, but they are not accurate in their portrayal of annuities. They think all annuities are variable annuities with high withdrawal rates. No! Annuities are all about taking longevity risk off the table.”

“But we’re still faced with a perception problem,” I said. “How does the industry overcome that?”