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What is a longevity annuity?

A longevity annuity provides protection against outliving your money late in life. Also known as an advanced life delayed annuity, this type of annuity requires you to wait until you reach age 80 or so to begin receiving a payout. Once the payout begins, the annuity provides a guaranteed, regular amount of income for the rest of your life.

These are usually used as a supplemental retirement investment. You typically would invest just a portion of your retirement nest egg in a longevity annuity - say, 10% to 25% - and leave the rest in your other retirement accounts.

As with any deferred annuity, your money in a longevity annuity grows until you start receiving payouts. The later you choose to begin your payments, the larger your payments will be.

If you die before you begin to receive payments, your heirs get nothing.

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