Outliving one’s assets is a valid concern since 50% of all individuals will live longer than their projected life expectancy based on actuarial tables. Given Davis’s financial situation, she is at the most risk for it. The most effective method of controlling for it would be to recommend a life annuity for Davis when she retires. A life annuity is essentially a life insurance policy in reverse. The investor pays a lump sum and receives a series of payments over his or her lifespan. The investor cannot outlive the annuity unless the insurance company fails and is unable to make the promised payments |
