Retirement has become an insecure and somewhat intimidating topic over the years. Baby boomers set the stage for change. Over half of the generation does not have enough funds for their retirement.

Many of these retirees have had to tap into their social security early, which has cut their benefits by as much as 30% (SSA, 2008). Their income is limited, and therefore, retirees are being forced to come out of retirement and work again. The Bureau of Labor Statistics reported that 26% of the overall workforce would be seniors over 55 years old by 2026, given the circumstances.

Fiscal Uncertainty During The COVID-19 Pandemic

An economic downturn is often the culprit of dipping into social security benefits early. Americans faced it during the Great Depression, the stock market crash in the ’80s, and the financial housing crisis in 2008. We are facing repercussions again as we battle the economic impact of a global pandemic.

According to the Social Security’s Administration, before the pandemic, trust funds were reported to be depleted by 2035, including the Old-Age and Survivor Insurance Trust and Disability Insurance Trust. COVID-19 has accelerated the concern.

Now, experts are expecting these trust funds to deplete by 2034 or sooner. It all depends on how long it takes the nation to recover from the pandemic. This is frightening for current and near-retirees.

Folks that are already in retirement are panicking, and younger generations have to prepare for what is to come of uncertain retirement funding. Pension plans are nearly non-existent, and individual retirement savings accounts are alarmingly low.

The Future of Retirement Planning

In the Report on the Economic Well-Being of 2019, the Federal Reserve revealed that among all adults, the median for retirement savings is $60,000. Near-retirement savings are even lower, and one-fourth of non-retirees do not even have retirement savings (2019, Pg.4). Savings are a major concern for retirement funding. 

Unfortunately, the pandemic put many of these people in challenging financial situations where they needed to dip into what little retirement savings they had. It has caused significant setbacks and put pressure on Seniors, especially.

Adapting calls for new plans and resources. That is why they are turning to individual retirement planning. Seniors must embrace DIY retirement planning since they do not have institutions to rely on any longer. 

Individualized retirement planning includes:

  • Purchasing guaranteed lifetime annuities.
  • Delaying Social Security claims.
  • Utilizing a reverse mortgage.
  • Putting their life savings into an investment portfolio.
  • Selling their life insurance policy for cash.

Seniors Finding Relief in Cash Settlements

These are great options, but the need for liquidity for older Americans is most critical. Those already in retirement have very few options; therefore, seniors turn to life settlements for cash for their individual retirement planning.

A life settlement involves the sale of a life insurance policy to a third party for cash. The transfer of ownership to the buyer also relieves the insured of premium payments.

This is a great place to start for seniors feeling pressured for funding and unsure how to adjust to the economic changes. It offers the liquidity they need, and it is perfect for any individual’s retirement plan. 

A life settlement is for those who are 65 and older, own a life insurance policy with a death benefit of $100,000 or more and have experienced health changes. Each settlement starts with an appraisal. Once the policy’s value is determined, it is set for bidding, making the potential cash payout much larger than the surrender value of a policy. 

Seniors can use cash settlements to their advantage. Many people are using the cash to pay living expenses, medical expenses, and unexpected costs. For some, it is helpful, and for others, it is lifesaving.

Is a Life Insurance Settlement Right For You?

Economic circumstances are out of control for Americans, but seniors can take initiative and consider new options now. Whether you are in retirement or approaching it quickly, a plan to sell your existing life insurance policy can offer peace of mind. Consider all of your options and get an appraisal today. 

Rob HaynieJanuary 29, 2021

Rob Haynie

Mr. Haynie has been a major influence on the evolution of the life settlement industry during his almost twenty-seven year career of proactive involvement. Not only has he been directly involved in negotiating and settling several thousand contracts, he also presently serves on the board of directors of the Life Insurance Settlement Association (LISA) and is a charter member of the Association’s PPC committee, which is charged with the regulatory and legislative activities of the industry. Additionally, he has served on both the Customer Advisory Board (CAB) of ITM/TwentyFirst Services and the Advisory Board of the Insurance Studies Institute (ISI). He was named one of the top 10 most influential people in the life settlement industry worldwide. Mr. Haynie, an Alumnus of Florida State University, currently holds a Life Agent License with Viatical Settlement Broker Appointment for LIS and has spoken at almost every life settlement industry meeting or conference, published articles on the subject and has given many educational webinars as well.

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