Managing life’s risks

Longevity's Hidden Costs

Corebridge Financial's recent research highlights a growing optimism about longevity: 50% of Americans believe they could reach 100, and 49% want to, citing advances in healthcare, lifestyle improvements, and better resources. Yet this extended lifespan clashes with inadequate preparation, as many fail to recalibrate retirement expectations for potentially decades-long retirements.

Healthcare expenses and inflation compound the issue. MetLife's 2026 study shows 58% of pre-retirees and 51% of retirees worry about outliving their defined contribution savings—a near-doubling from 30% a decade earlier. Persistent rises in medical costs, coupled with longer lives, erode nest eggs faster than anticipated.

The life insurance and annuity sectors reflect these tensions. Annuity sales continue growing steadily into 2026, fueled by demand for guaranteed income against market volatility and longevity risk, with fixed and indexed products leading. However, industry changes add complexity: starting January 1, 2026, Corebridge Financial consolidated annuity issuance in New York to one subsidiary, streamlining operations amid broader regulatory and market adaptations.

Non-obvious angles emerge in policy shifts from recent legislation like SECURE 2.0 and related acts. High earners (over roughly $145,000-$150,000 in prior-year wages) must now route 2026 catch-up contributions to Roth accounts rather than pre-tax, trading immediate tax relief for tax-free growth later—a boon for those expecting higher future brackets but a potential hit for current cash flow. Meanwhile, economic uncertainty, including potential downturns and asset bubbles, heightens the need for risk management tools like annuities, even as falling interest rates could temper appeal for certain fixed products.

These dynamics affect middle- and upper-income households most acutely, particularly those nearing or in retirement, where sequence-of-returns risk and unexpected health events can devastate portfolios without buffers. Inaction risks poverty in later years or reliance on family, while over-reliance on conservative strategies might sacrifice growth needed for extended lifespans.