Society of Actuaries’ new report shows increasing longevity as a major retirement planning risk: “Life spans are continuing to increase. In the past half-century, life expectancy for newborn American males improved by an average of almost two years each decade, from 66.6 years in 1960 to 75.7 years by 2010. For females, the average increase was about 1.5 years per decade, from 73.1 years in 1960 to 80.8 years by 2010.

• Inflation has not been a major concern recently with the Consumer Price Index (CPI) increasing only 2.4 percent a year, on average, in the first decade of the 2000s. However, the CPI may not reflect price increases people are experiencing; so, for the longer term, those who have to make retirement assets last for several decades need to be aware of inflation’s potential to erode purchasing power.
• Products for managing longevity risk continue to proliferate even though traditional annuity products continue to have a poor image and are not widely purchased.
• Employer-sponsored defined-benefit plans continue to decline in prevalence, and more of these plans have been and are being frozen. While about half of all retired people today receive some income from defined-benefit plans, this income source is steadily declining, making personal responsibility to manage retirement risk ever more critical. This trend increases the importance of managing longevity risk and makes it more challenging.”