Jul. 27: BEST OF THE BLOGOSPHERE

July 27, 2026

Study suggests guaranteed income “can actually help you live longer”

Could having guaranteed income for life actually make us live longer?

A recent working paper from the National Bureau of Economic Research in the U.S., reported on by Liliana Hall for Money.com, suggests there is indeed a link.

The paper, her article notes, “finds that folks who choose annuities are about three per cent less likely to die over the next decade than those managing withdrawals on their own. It’s a small difference, but it could say a lot about how financial security shapes our overall well-being.”

The study, the article continues, covered 600,000 retirees in Chile, where the retirement system “forces most workers to choose how to turn their savings into income.”

“Over five years, annuity users had about 2.5 per cent lower mortality; over 10 years, that gap widened to roughly 3.6 per cent,” the article reports.

Chile was used in the study because unlike other countries it relies “primarily on a defined contribution (DC) pension system. Most workers build retirement savings in individual accounts managed by private pension funds rather than through a traditional government pension,” the article continues.

When Chileans reach retirement age, the article explains, their choices for turning their savings into income boil down to selecting either a guaranteed lifetime annuity or opting “for market-based withdrawals.” There are some hybrid options (including both annuities and market withdrawals) available, the article adds.

The system’s design has made annuities a very popular choice for Chileans, the article tells us.

“That structure has helped create one of the more active annuity markets in the world. More than 60 per cent of Chilean retirees choose annuities, compared with less than five per cent of U.S. retirees, according to the Center for Retirement Research at Boston College,” the article notes.

The “market-based withdrawals” alternative to annuities is “a government-run withdrawal system that pays out savings in installments,” the article explains.

OK – so how does the link to longer life work? Let’s read on.

The article suggests that those choosing annuities face less stress.

“Retirees who rely on market-based withdrawals may face more uncertainty about how long their savings will last, especially during downturns. Annuities, by contrast, provide a steady paycheque. That stability may reduce anxiety and the mental strain tied to financial uncertainty,” the article notes.

The other reason researchers found was that having guaranteed income makes one “more likely to invest in their health,” the article notes. Annuitants were found to be more apt to be “keeping up with routine checkups, preventive care and other ongoing medical needs.”

There’s a sense of security that comes with a lifetime annuity, the article notes.

“Many people fear running out of money more than they fear death,” Angie Welsh, founder and president of My Annuity Agents, tells Money.com. “The financial stress that comes with the unknown has real negative impacts on both physical and mental well-being.”

Those withdrawing money from an actively invested account can end up “living and dying with every market spike and dip,” she tells the publication. Their sense of security fluctuates just as much as the market does, the article adds.

And not knowing how much your income will be (at least, exactly) can lead to behaviour changes, she tells Money.com.

“Without a steady income stream, some retirees become hesitant to spend money on essentials that support their quality of life — like healthcare, nutrition and social activities — because they’re trying to avoid outliving their savings,” she states in the article.

Members of the Saskatchewan Pension Plan have the option to convert some or all of their savings into a lifetime annuity when the time comes to turn savings into income.

While you are contributing to SPP, your savings dollars are invested in our professionally managed, low-cost, diversified pooled fund. You decide how much to contribute, and you can transfer in any amount from registered retirement savings plans (non-locked-in) you may have.

At retirement, you can elect to convert some or all of your savings to a lifetime annuity. Depending on the annuity type you select (the Pension Guide retirement_guide.pdf provides full details) there can also be benefits paid to a surviving spouse or beneficiary.

Check out SPP today!

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