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Single Life Annuity Alternative: The Tontine?

Despite the fact that one research paper recently found Americans are more afraid of outliving their money during retirement than death itself, and economics research has long since shown that leveraging mortality credits through annuitization is an “efficient” way to buy retirement income that can’t be outlived, the adoption of guaranteed lifetime income vehicles like a single premium immediate annuity purchased at retirement remains extremely low.

In a recent new book entitled “King William’s Tontine: Why The Retirement Annuity Of The Future Should Resemble Its Past”, retirement researcher Moshe Milevsky makes the case that perhaps the primary blocking point of immediate annuitization really is its cost, and that guaranteeing mortality credits takes an unnecessary toll on available retirement income payouts (not to mention creating systemic risk for insurance companies if there’s a medical breakthrough!).

As an alternative, Milevsky advocates for an alternative retirement income vehicle, called a tontine.


  • The motive to kill off the other recipients of tontine payments is covered in the linked article. It was a plot device in French novels.
  • Thanks @bee. It is a very interesting idea. If you are one of the people living past life expectancy your income increases over time and you essentially won the lottery, more-so every year you age. If you die early, well you're dead. Who cares. That would be the same outcome as an annuity which doesn't give you added income for longevity.
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