They are both to blame and credit for the changes they made in society, work and pop culture over the years. With 10,000 Boomers reaching 65 each day from now through 2030, this powerful generation has the potential to change how we plan for retirement.
The changes are being driven by three major forces. The first is the obvious. The average lifespan of people is increasing. According to the Social Security Administration, 65-year-olds can expect to live between 19 and 22 years more, while one-third of them will live to their 90s. This is compared to 1960 when a 65 year-old man would expect to live an average 13 years longer.
Second, people are living longer and more active. Retirement is less about giving up work to have a leisure life after 65. 44% say they now see themselves phasing out of work and transitioning to part-time or entrepreneurship after 65.
Financial concerns are perhaps the third reason that retirement is different today than it was in the past. Boomers are entering retirement with greater debt and more dependents than ever. The median household debt of households headed by a 65-year-old or older person was 4.5 times greater than it was in 1989. 59% of Boomers are parents, and they report that they financially support their children between the ages of 18 and 39. This is due to factors like college costs, student loans, and a difficult job market for recent graduates.
Many retirees and pre-retirees are being forced to reconsider their life insurance requirements because of financial responsibilities. Life insurance is an important part of any financial plan, no matter how old you are.
Life insurance for those over 50
The good news about life insurance is that it is now more affordable and available than ever. There are options available for people as young as 80 and those with different health conditions.
When choosing coverage, it is important to decide whether permanent or term life insurance is best suited for you.
- Term insurance can be used when you have a temporary coverage need. It covers anything from 5 to 30 years. If you have a few years remaining on your mortgage, you want to ensure that your loved ones aren’t left with the burden of paying off the house. A 10-year or 15-year term policy could be the best option to meet your needs.
- If you have a longer-term goal, such as. A permanent insurance policy like universal or whole life could be better if you have a more long-term goal, such as leaving something for your heirs or making sure money is available to care for a child with special needs. Permanent insurance, as the name implies, is designed to last for your entire life. It will eventually pay a death benefit if you continue paying the premiums.
Although a permanent policy sounds great, a term policy of life insurance is cheaper than a whole-life policy. This applies even if you purchase it at age 60 or 70. It’s important that you only buy what you really need.
Let’s take an example: A 60-year old client purchased a life insurance policy that would provide coverage in the event of his death for the remaining 15 years on his mortgage. For his circumstances, a 15-year term policy of $500,000 made the most sense. The premiums were only $180 per month because he was healthy. The cost of a permanent policy would have been more than $500 per month.
Another example: A client who was preparing to retire had a pension that would pay only while he was still alive. His wife would see a dramatic drop in her monthly income if he died and his pension payments were stopped. A permanent policy was the best option in this case. He wanted to make sure that his pension income would continue to support his wife, regardless of how long they live. Although a 20-year policy would have been sufficient, they wanted to be sure. The death benefit will be paid to his children if his wife dies before he does. A term policy would have been more affordable, but would not have achieved their goals. Therefore, the permanent policy was a good choice.
There are many options available to you.
It is important to review the policy details when considering permanent life insurance. This will allow you to see the benefits and costs that are assured vs. those that depend on the insurer’s dividends or asset returns. These types of unexpected events can prove to be devastating financially if you are living on a fixed income.
Many permanent life insurance policies also offer optional riders that allow you to customize the coverage to meet your specific needs. If you don’t have long-term insurance, you might consider adding a long-term-care rider to your policy that will allow you to use some or all of your death benefit for nursing home expenses.
Let’s get to the bottom of it. Don’t forget about the importance of life insurance when you are defining your retirement. Don’t think it’s too late for you to get the coverage that you want at a fair price.