According to the Social Security Administration, one out of every three 65-year-olds today will live past age 90.
Many are underfunded for that long a life span—along with its potential 30-plus-year retirement—and their families are often not prepared to cover the gap.
This is an issue a new type of annuity unveiled recently by a division of MassMutual is specifically designed to address.
AgeUp is a new product designed to provide financial protection for the adult children of the Boomer generation who are concerned about their parents outliving their financial resources. It is issued by MassMutual and was developed by Haven Life Insurance Agency (Haven Life), MassMutual’s in-house, direct-to-consumer startup.
“Traditional life insurance protects people from the financial strain of loved ones dying sooner than expected. AgeUp is the opposite: It protects people from the financial strain of helping support a loved one who outlives his or her resources,” said Blair Baldwin, General Manager for the AgeUp product.
AgeUp was developed by a group that is uniquely qualified to help protect Americans from outliving their retirement resources. Baldwin’s team was acquired by Haven Life in August of 2018 with a mission to rethink the buying experience for longevity products and, specifically, how income annuitization can help address the financial concerns of future retirees.
The AgeUp team developed what they believe is a first-of-its-kind annuity product that provides an overlooked customer base with a simple online solution for the retirement funds gap and brought it to life using Haven Life’s technology platform.
“More and more people are living into their 90s and beyond and there hasn’t been a financial product specifically designed to address the problem of adult children supporting their aging parents until now,” Baldwin said. “We set out to create a solution to help everyday Americans address this growing need, and found we could achieve this goal by creating a new kind of deferred income annuity.”
MassMutual says AgeUp was designed after internal research with hundreds of potential customers, mainly Millennials and Gen Xers, which revealed:
- 71% believe at least one parent or in-law will live longer than average
- 57% have a relative who lived to age 95 or beyond
- 64% expect to financially support their parents or in-laws in their old age
- 35% think their parents will run out of money between the age of 90 and 100
In order to build a solution for parents’ longevity risk, the team behind AgeUp say they developed an annuity that differs from all other annuities today in four important ways:
- AgeUp is designed for financial protection for life after 90, and as such, is the only annuity that converts into an income stream for life beginning at age 91 or later. Age 85 is typically the oldest annuitization age for other products.
- AgeUp is the first annuity to be financially accessible to nearly everyone, with no upfront contribution required and monthly premiums starting as low as $25.
- AgeUp is the only annuity specifically designed for the intergenerational use case of adult children supporting their aging parents.
- Adult children pay the monthly premiums for AgeUp and receive the monthly payouts once the parent reaches the trigger age.
AgeUp was recently approved for sale in 44 states, Washington, D.C. and Puerto Rico, with plans to reach even more of the population by the end of 2020. In 2020, Baby Boomers in their early 60s and 70s will be able to purchase AgeUp directly. More information is available at age-up.com.
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
