Create a projection of your future income and expenses to help you decide if you should purchase a deferred income annuity, also known as longevity insurance, with a longevity insurance calculator, reports Forbes. Enter estimated amounts you expect to receive from your pension, Social Security payments and any other retirement income. Use your current expenses adjusted for possible lifestyle changes to guess future expenses.
Purchase longevity insurance for a guaranteed income stream if you live past the age of 84, explains Kiplinger. Pay a lump sum premium at age 60 to 65, and receive substantial monthly payments once you reach age 85 for the rest of your life. However, if you die before you turn age 85, you lose the entire premium. Having longevity insurance decreases anxiety that you may outspend your retirement savings before you die.
A longevity insurance calculator includes inflation in its projections, according to Forbes. To ensure safe margins, estimate a modest return on your investments. If the calculator anticipates that the income you already have should last comfortably into old age, you may not need longevity insurance. If the projection shows that you may run out of money around the time you reach age 85, buy longevity insurance to provide yourself with an income stream that kicks in when times get tight.