In the Wall Street Journal, Anne Tergensen highlighted a new trend in annuities: longevity policies. Unlike standard annuity products, this investment only begins payouts at a certain advanced age (usually 80 or older). When payments do begin, annual payments are higher. As a result, you may be able to maintain a similar standard of living during your golden years. Due to interest compounding, you can amass a significant sum with a smaller initial investment than a regular annuity.
Unfortunately, buying a longevity protected annuity uses up a significant portion of your emergency savings. Also, you’ll lose most of your investment if you pass away before the bulk of the policy is paid out; just like traditional annuities.