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Strategies & Market Trends : Dividend investing for retirement
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To: Steve Felix who wrote (9044)5/17/2011 10:23:10 AM
From: E_K_S  Read Replies (2) of 34328
 
Death Derivatives Emerge From Pension Risks of Living Too Long
noir.bloomberg.com

From the article:"...Pension funds sitting on more than $23 trillion of assets are buying insurance against the risk their members live longer than expected. Banks are looking to earn fees from packaging that risk into bonds and other securities to sell to investors. The hard part: Finding buyers willing to take the other side of bets that may take 20 years or more to play out...."

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"...Pension funds can hedge against life-expectancy risk by transferring assets to an insurer or other counterparty that promises to pay some or all of the future liabilities. Last year, GlaxoSmithKline Plc, the U.K.’s biggest drugmaker, became the 10th FTSE 100 firm to buy insurance on about 900 million pounds ($1.5 billion), or 15 percent, of its U.K. obligations...."

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I am anticipating that the Medicare eligibility age will be increased by the time I qualify. As a result, my planning includes self funding my health insurance which now costs more than my monthly mortgage payment. Luckily the house is paid off next year so the windfall from no mortgage payment goes to pay the health insurance.

The only problem is trying to set up ongoing revenue streams that grow at the same or higher rate as the health insurance premiums. My solution is to increase my basket of drug companies that now include MRK, LLY, PFE, BMY and GSK.

finance.yahoo.com

EKS
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