The Reality of the “New” Retirement

Are you ready to face retirement? According to a recent Merrill Lynch study, “Americans’ Perspectives on New Retirement Realities and the Longevity Bonus,” most Baby Boomers prefer peace of mind over wealth accumulation and are looking to reinvent themselves in retirement.

The Merrill Lynch study found that today’s retirees expect to live longer and work longer than earlier generations, and are looking for guidance in what is uncharted territory.

Thirty-nine percent of the survey respondents expected to include part-time work in their retirement years, and 24% to mix stretches of work with periods of leisure. Forty-eight percent said they would work in retirement just for “stimulation and satisfaction.”

Fifty-two percent of the people in the survey expected to provide their adult children with some form of ongoing support; 35% of respondents expected to give some support to their grandchildren, 16% to a parent or parent-in-law and 10% to a sibling or sibling-in-law.

Asked what was important to pass on to future generations, 74% of respondents said their top priorities were values and life lessons. Passing on financial and real-estate assets was a priority for 32%.

Serious health problems were a major concern for 72% of respondents, with 60% saying they did not want to be a burden on their family, while 47% were worried about running out of money to live comfortably. Along with this, health care expenses were the No. 1 financial worry for retirement for 52% of respondents with investable assets above $250,000 and 37% of less affluent respondents.

A popular belief has it that people today are delaying retirement, but the survey found that 59% of men and 57% of women had retired early. For those who retired early, 34% stated the main reason was a personal health problem, 27% retired early because they had enough money to retire, and 24% had lost their job.

An interesting finding is that only a third of large companies currently offer health benefits to retirees versus two-thirds 25 years ago. As a result, retirees are looking for advice about how to protect against retirement health-care costs, with 75% of respondents saying they needed help in sorting through health care and long-term care options. Close behind, 71% wanted help to understand Social Security or employer pensions.

So, let’s put this all in perspective. What the survey points out is that pre- and post-retirees continue to need professional advice to make appropriate decisions. Prior to age 65, this means understanding the needs for disability insurance, life insurance and long-term care insurance.

After 65, most disability insurance is no longer available, but the need for life insurance to replace lost income continues, as does the need to plan for health care for debilitating illnesses, illnesses which may require care in the home or in a facility.

Some 10,000 people per day reach the age of 65 and this number will continue for the next 17 years. Many of these people will have longevity risk—the risk of outliving their money. Now is the time to plan using appropriate techniques and products to minimize this risk.

Talk to your agent or professional advisor today.

Marvin H. Feldman, CLU, ChFC, RFC, President and CEO of Life Happens

by Marvin H. Feldman

Marvin H. Feldman, CLU, ChFC, RFC, is president of the Feldman Financial Group in Palm Harbor, Fla., and president and CEO of Life Happens. He is a 41-year Million Dollar Round Table member and was the 2002 president. He is a 33-year member of the MDRT Top of the Table and a past Top of the Table chairman. He also is the recipient of the 2011 John Newton Russell award, the highest honor bestowed on an individual by the insurance industry.

  1. The fact is that individuals are living longer and as Insurance Agents and Advisor we have to do a better job educating consumers about the benefits of owning Life Insurance and not leaving their Families Financial Security to chance. Living longer in retirement consumers means that Life insurance agents have to include these information in the sales process.

  2. Health problems, rather than financial success, were also ranked as the top reason that the retired respondents decided to stop working . That could point to the fact that many Americans aren’t saving up as much money as they would like to before retiring. That’s consistent with previous research that shows that the Great Recession has negatively impacted older Americans’ ability to retire. Almost two-thirds of working American s now report they’re planning to delay their retirement, and most Americans say they’re putting off retiring so they can continue to access health benefits through their employer-sponsored insurance plans .

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