a. You live too long - People are living well into their 90's. We used to plan for retirement of 15 years. Now it could stretch into 30 years. That is why you see so many elderly working at Walmart.
b. You get hurt and cannot work - You won't be able to put away money, you could go bankrupt and lose what retirement you do have.
c. You get sick - You need care over a long period of time in your retirement.
d. Social Security - You cannot count on the Government to take care of you. Social Security is disappearing.
e. Pension plans - One recent study found that America's 100 largest corporate pension plans were underfunded by $217 billion at the end of 2008. The Pension Benefit Guaranty Corporation says that the number of pensions at risk inside failing companies more than tripled during the recession.
a. Taxes - Slicing your savings.
b. Inflation - Shrinking your dollar.
c. YOU - Procrastinating, Failing to Plan, Ignoring the realities of your retirement needs.
a. Life Insurance
a. The two types of insurance are TERM and PERM-anent.
b. TERM: Coverage for a specific amount of time at lower cost.
c. PERM: Coverage for life with tax deferred or tax abated build up.
a. Universal Life is essentially Permanent Term without the cash value build up.
b. If you are a suitable candidate, health and finances, whole life provides guaranteed interest and dividends that are not subject to market gyrations. Many people with variable universal products linked to the stock market lost a lot of value over the last several years. Whole life products were growing during the market decline base on their guarantees.
a. Tax-free Retirement – Withdrawals from the cash value account of your Whole Life insurance policy is tax free up to the point of the premiums that you've already paid, and generally, borrowed funds are not taxed.
b. Bankruptcy proof - Life insurance can be used for asset protection in Bankruptcy. Rules vary by state.
c. Can withdraw without penalty - The most important feature of a permanent life policy is that you can take a policy loan by borrowing against your cash value. With an IRA or Roth IRA there are penalties for early withdrawal.
a. The most important factor is the underwriter. You have to look beyond the marketing and pricing and look to the strength of the company. A great deal at a company that disappears is not a great deal. I believe the best value for the buyer, the insured, can be found with mutual companies, meaning the policyholders own the company, not stockholders who seek profits.
b. The second most important factor is your advisor. If you have life insurance and have not heard from your agent in over a year, you need a new agent. If you have not reviewed your policy in the last couple of years, you need to do that. If your advisor does not spend at least 30 minutes gathering for financial facts to advise you, then their recommendations should be reviewed very carefully.
a. You can, and should, start as soon as possible. The face value amount is different from the cash value. Face value is the amount of insurance you have bought and what your beneficiaries will receive upon your death. Cash value is the amount of money "saved" in your policy that is in excess of the cost of the insurance.
b. The amount of money that you are able to withdraw for your retirement is based on the cash value. The more premiums you pay, the larger the cash value and the more rapidly it will grow.