NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Retirement Planning Basics
In retirement planning, the term 'longevity risk' refers to the risk that a retiree will:
Longevity risk is the risk that a retiree lives longer than planned and runs out of money. Planning therefore needs a corpus and withdrawal approach that can last well beyond average life expectancy, rather than only the average expected lifespan.
- AOutlive the accumulated retirement corpusCorrect
- BLose the corpus because of a stock market fall in the first year
- CFace higher income tax after retirement
- DBe unable to withdraw money from the pension account before age 60
Explanation
Longevity risk is the chance that a person lives longer than expected and exhausts the savings. The market-fall option describes sequence or market risk, and the tax and withdrawal options describe different issues.
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