(The OECD is the 35-country group whose full name is the Organisation for Economic Co-Operation and Development.) In Successful Retirement: Healthy Aging and Financial Security, U.S. workers generally beat out others in 14 countries for retirement preparation. An impressive 91% of Americans whom Transamerica surveyed felt “very or somewhat” personally responsible for making sure they have sufficient income in retirement vs. just 73% of workers globally. “the U.S. stands out for the high cost of health care and its failure to generate better health outcomes,” AARP and FP Analytics looked at how prepared 12 nations are for the growth of their 60+ populations in four sectors: 1) Community & Social Infrastructure; 2) Productive Opportunity & Economic Output; 3) Healthcare & Wellness and 4) Technological Engagement. 47% of Americans have a backup plan for retirement income if they’re unable to continue working before reaching their planned retirement age vs. 33% of workers overall. 26% of Americans think they are saving enough for retirement — that’s depressingly low, but twice the percentage of workers globally. India came out with the top Aegon Retirement Readiness Index score based on survey questions about: personal responsibility, awareness, financial understanding, retirement planning, financial preparations and income replacement. Indian workers were also the most likely to have a backup plan for retirement. AARP was more interested in aging policy in preparation for the coming rapid growth of population age 65 or older. In China’s 14-year-old Silver Age Action Initiative, retired professionals volunteer to spur local economic and social development.
Many people do not view life insurance as an essential and vital part of a retirement income plan. They see life insurance primarily as a way to protect families from the early loss of a breadwinner during the working years. However, life insurance has the potential to be so much more if properly utilized in a comprehensive retirement income plan. According to Jen Sias-Lyke, State Farm® Insurance Agent, “Life insurance plays an important role in any financial plan. It helps loved ones recover from financial risks and unexpected costs, increasing their chances of reaching long-term goals and achieving dreams. Thinking about financial protection and retirement can seem overwhelming, but as your life changes so does your financial situation.” Unfortunately, many people do not fully understand nor appreciate the value and benefits that life insurance can represent as part of a retirement plan. Having the correct type of life insurance and the appropriate amount of life insurance coverage in retirement will accomplish multiple jobs. It can help protect your income, provide tax-free cash flow, help manage taxes, provide peace of mind to families, and even improve the total returns in a portfolio. Here are a few strategic ways to utilize life insurance as part of a comprehensive retirement plan:
Protect Your Income in Retirement. According to James J. Meehan, MSM, Managing Partner of 1847Financial, “Life insurance needs to be the foundation of any solid retirement plan if your family is depending upon your retirement income. You can’t invest your way out of an untimely death.” When one spouse passes away in retirement, the surviving spouse often struggles to meet their income needs. While expenses might be lower, the drop in expenses rarely offsets the drop in income. At a minimum, one of the two Social Security benefits the couple was receiving will go away. So for many couples, life insurance can be used to ensure that there is enough money to replace any lost Social Security or other retirement income. In this way, the surviving spouse is able to maintain his or her current standard of living throughout retirement.
Keep Your Retirement Savings on Track. According to retirement income expert Curtis V. Cloke, CLTC, LUTCF, RICP®, “In the 10 years leading up to retirement, many couples find themselves playing catch-up on their retirement savings. During this period, if one spouse dies, the surviving spouse could end up being severely short on retirement savings.” For this reason, Curtis recommends buying a 10- to 15-year term life insurance policy on both spouses prior to retirement in order to protect the retirement savings…