NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Miscellaneous Aspects of Retirement Planning
In retirement planning, 'longevity risk' refers to the risk that a retiree will:
Longevity risk is the risk that a retiree lives longer than expected and exhausts the accumulated retirement corpus. It differs from market risk, medical inflation risk or early retirement effects, because it arises purely from a longer-than-planned lifespan requiring income for more years.
- AOutlive the retirement corpus accumulatedCorrect
- BLose capital because of a stock market fall
- CFace higher medical costs than expected
- DReceive a lower pension because of an early retirement
Explanation
Longevity risk is the possibility that a person lives longer than the period for which the corpus was planned, so funds run out. Market loss, medical inflation and early retirement are separate risks.
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