Journal of Emerging Trends in Economics and Management Sciences: Home

Abstract:
This study examines the effect of longevity risk on retirement income by focusing on the mode of utilizing pension funds at retirement. The population of interest for this purpose comprised of the Baby Boomers (BBG) in Lagos Metropolis. The study is based on a sample size of 499. The objectives of the study includes the determination of average life expectancy, the proportion of the BBG in Nigeria who live up to at least 5 years to receive pension benefits and the relationship between the baby boomers? retirement income and expected lifespan. Statistical tools such as correlation and hypothesis tests were used to test the hypotheses set out in the study. The results of the study show that with an average lifespan of 56.57 years, fewer than 80 percent will live for at least 5 years to receive pension benefits. The study also revealed that there is no relationship between retirement income and lifespan of the baby boomers since more than 70 percent of them have monthly income less than N40,001.00 and because they did not make any additional contributions for long periods during their working career. The researchers therefore concluded that the life insurance industry may have obvious interest in helping individuals drawdown their retirement assets in an orderly way, but it is not capable on its own to address the challenge posed by longevity. Consequently, it was recommended that government should create incentives for all employers to introduce more lifetime income options in addition to the one available under the present defined contribution plans.

Keywords: life expectancy, retirement income, baby boomers and annuities

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