Tuesday, December 27th, 2011 | | |
The real question is whether 80 is the new 65 by choice or by circumstance. Wells Fargo Bank surveyed a group of Americans from age 20 to 70 who earned between $25,000 and $100,000 asking questions about retirement, savings and Social Security and came up with some interesting information.
Three-fourths of those surveyed said they expect to work in their retirement years. One quarter said they will need to work until at least age 80 to live comfortably in retirement, and you can be assured that this is not by choice. Given the choice, they would retire as soon as possible.
Almost half (47%) of respondents said that they are planning to continue in the same job or a job of similar responsibility. This, of course, assumes they have the ability to continue in their same or similar job, the economy justifies their continued employment and their employer is willing to extend their employment. And what happens if none of these options are available?
The survey found that three-fourths of Americans said it is more important to have a specific amount saved before retirement, regardless of age, while only 20% said it is more important to retire at a specific age regardless of savings.
In terms of saving for retirement, 53% of those surveyed said they need to significantly cut back on spending now to save for retirement. Notice the word significantly. How likely are you to initiate a major change in lifestyle to achieve a goal 20 or more years in the future?
According to Wells Fargo, on average, Americans have saved only 7% of their desired retirement nest egg, with a median of $25,000 saved versus a median retirement goal of $350,000. Americans have been saving less than what is needed for retirement and the majority do not trust the stock market as a place to invest for retirement.
On the issue of Social Security, there was an age divide. Those in their 60s expect Social Security to provide 46% of their retirement funding. But more than 25% of those in their 20s and 30s expect no income at all from Social Security during their retirement.
This sounds like a very good reason to start planning now by reaching out to an agent or advisor to help navigate the options available in reaching their goals and reduce their reliance on government programs.
Thursday, December 22nd, 2011 | | |
A recent Guardian Life Insurance Company survey found that Americans are overwhelmed about the prospect of saving for retirement, and they are unsure how life insurance fits in the overall planning. This survey indicates that all Americans are exhibiting uncertainty and, at worst, complete inaction when it comes to financial decision-making.
The survey also revealed persistent uncertainty about the economy, coupled with the belief that it is headed in the wrong direction, as a leading source of anxiety at every life stage about the ability to save for a comfortable retirement.
This sense of being overwhelmed about retirement planning further heightens the distress many Americans are feeling about financial security over the long term. While nearly all respondents (92%) surveyed say they are confident in their personal financial decision-making, almost four in 10 of the general population (39%), and more than half (52%) of Gen Y and one-third of Gen X don’t even know where to begin when it comes to planning for retirement.
Among factors the survey looked at were people’s perceptions of the direction the economy is heading. From a generational standpoint, Gen X (82%) believes the economy is headed in the wrong direction and feels the least financially secure (47%) of any group. Three-fourths of the general population also shares a pessimistic view of the economy’s direction, while more than one-third (37%) do not have a sense of financial security. Gen X members (59%) are also the most concerned that they will not have enough money saved for retirement, perhaps reflecting the sequence of economic forces that have impacted their working lives.
Survey respondents who own whole life insurance were the most confident that they will have saved enough for a comfortable retirement. This feeling of security may be due to their knowledge that the cash value of a whole life policy can be accessed on a tax-advantaged basis for supplementing retirement income. However, among the general population, the survey found that there is a lack of understanding about how different types of life insurance work. Americans in general are divided about whether it’s smarter to buy term life insurance and invest the rest, or to buy whole life insurance and treat it as part of one’s overall financial portfolio (40% each).
As for how their perceptions of the economy have impacted their overall financial decision-making, the survey revealed that two-thirds of respondents from the general population (65%) are more likely to keep their money in a savings account rather than invest it, despite the fact that 62% of them feel that a down market is an opportunity. However, most respondents (60%) still believe it is important to keep investing in their retirement fund because the economy is less stable, with skittish Gen X being the exception: 47% of respondents from this cohort believe investing in their retirement fund is actually less important during this time of economic instability.
Based on survey findings, Gen Xers may have been disproportionately impacted by the turmoil of the economic landscape, but the Guardian survey indicates that all Americans are exhibiting uncertainty and inaction when it comes to financial decision-making.
So what do these results tell us? It says the financial services industry needs to do a better job of educating the consumer across all generations as to how they can and should plan for their financial future, and not just pure financial products, but life insurance too.
This is where the LIFE foundation comes into play. We’ve been educating the consumer for the past 17 years about the different types of insurance and what these products do. LIFE has the resources and the credentials as a non-profit third party to help consumers make these important insurance decisions, but the industry needs to do a better job of accessing and using these tools.
Tuesday, December 20th, 2011 | | |
We travel a lot as a little family of four – a whole lot. We schlep somewhere around the country at least once a month, mini carry-ons and comfort blankets for the kids in tow. At least once a year we make a major pilgrimage to someplace really outside our comfort zone, like this past summer when we traveled by train across Eastern Europe for a month. It took us a handful of years to really get the process of packing the kids just right, and it’s only now that they’re both a tiny bit older I don’t have to remember to pack seven kinds of snacks for an airplane ride. But the most important thing I can do is make a contingency plan.
Before the luggage gets packed and the plants get watered one last time, my husband and I do something far less glamorous: call a brother-in-law to make sure he knows where all the important papers are in case of an emergency. While my husband and I don’t travel together without the children very often, we still travel like we do just so we’re safe. We update our beneficiary list, and make sure the executor of our will knows where it’s located and how to get to it should something go wrong. Just in case. Heaven forbid something should happen to one of us in the middle of Europe where we need to get to important documents and no one back home knows what we’re talking about.
Here’s a basic checklist of things to take care of before you leave home:
- Draft a will: it doesn’t have to be the most detailed will you’ll ever leave, but something is better than nothing. Date it, have it notarized, and put it somewhere very safe.
- In said will, list the beneficiaries of your assets. My husband and I don’t have the largest collection of wealth, but we don’t want to leave it up to the state to decide who gets what when we die.
- Also list what will happen to your kids in the will. If you haven’t had this awful conversation, now is the time. There really isn’t a great way to do it, just sit down and decide who goes where before you step foot out your door; nothing else is as important as deciding what will happen to your children should something terrible happen to you and your spouse.
- Get a safety deposit box at the bank: even if you buy the cheapest box available, you want somewhere safe and outside your home for really important papers to live. Put the key somewhere even safer.
- Put a copy of all insurance policies in your safety deposit box. Make sure a trusted friend or family member knows about the deposit box and its contents in case of emergency.
- Make copies of passports, birth certificates, insurance policies, mortgage statements, and medical records to store in the deposit box.
- Put someone in charge of watching your house. Whether or not they stay on the property and babysit, make sure someone is on your property at least twice a day taking papers off the front porch, checking mail, retrieving packages, and turning lights on and off.
- Set up auto-pay for your bills or take care of them through the period of time you’ll be away. No one wants to come home from a lovely vacation to a termination notice on the front door.
Now have a great time on your holiday vacation! No need to worry about anything at home, you’ve already taken care of everything.
Friday, December 16th, 2011 | | |
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