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The Beaumont family is considering whether to claim Social Security benefits at age 62 or delay until 70. The planner explains that delaying is essentially 'longevity insurance.'
Which of the following best describes the 'longevity insurance' benefit of delaying Social Security?
- It guarantees that the Beaumont family will receive at least an 8% annual return on their 'investment.'
- It reduces the income tax burden on the Beaumont family's other retirement assets.
- It increases the probability of receiving a total lifetime payout that exceeds the cumulative amount from age 62.
- It provides an inflation-indexed lifetime annuity at an actuarially favorable rate with no counterparty risk.
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