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Investing Blog Roundup: Longevity Risk Pooling from a Mutual Fund

For several years now, it has been impossible to purchase inflation-adjusted lifetime annuities (other than by delaying Social Security). For investors taking a “safety-first” approach to retirement planning, this leaves only TIPS and I Bonds as the tools available. While TIPS and I Bonds are indeed useful tools, they don’t offer the risk pooling that lifetime annuities do (i.e., lifetime annuities stop paying income when the annuitant dies, and because of this they can provide a higher amount of income than products without risk pooling of this nature).

A new product, however, offers longevity risk pooling in a mutual fund. And these new funds also offer an inflation-adjusted option (i.e., the underlying pool of assets will be TIPS). They’re not cheap, with a 1% annual expense ratio. And because they’re mutual funds rather than insurance products, they don’t offer the same level of guarantees that lifetime annuities do. Still, it’s an interesting development to say the least. I hope we continue to see useful innovation in the area of inflation-adjusted retirement income.

New LifeX Funds Combine TIPS with Longevity Pooling for High Safe Withdrawal Rates from Allan Roth
LifeX Funds Answer the Call from Nathan Dutzmann
LifeX Funds product information page

Other Recommended Reading

T+1 Trade Settlement Starts in May from Melanie Waddell
Knowledge Alone Doesn’t Change Behavior from Ben Carlson
The Story That’s Sold from Nick Maggiulli
How I Created My Own Charitable Giving Plan: The Final Installation (Probably) from Meg Bartelt
The 401(k) Industry Owns Congress Benjamin Guggenheim

Thanks for reading!

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