The U.S. is facing a retirement crisis. American Baby Boomers are leaving the workforce at an estimated rate of 10,000 per day - and that’s supposed to continue through 2027.
What’s more, a staggering 45% of Baby Boomers have nothing whatsoever saved for retirement. That means that a huge percentage of this group is also planning to rely heavily on Social Security for their living expenses. And since Social Security simply won’t ever be an ironclad guarantee, that’s not a very good plan.
As if all of that weren’t enough, all of us are living longer than ever before - which means our retirement dollars have to stretch longer than they used to.
Advances in medicine are giving us greater health, but also greater medical expenses.
And the Great Recession not only destroyed many seniors’ retirement savings.
It also affected their adult children, many of whom lost jobs or savings themselves, and may even be seeing their own 20- and 30-something children move back home with them.
There’s a reason that those in their 40s, 50s, and 60s are often referred to as “the sandwich generation.” They’re sandwiched between caring for both their parents and their children – and often, they experience significant financial strain as a result.
If that isn’t a perfect storm, we don’t know what is. Having a huge group of seniors who can’t meet their monthly living expenses is bad news for those seniors, and bad news for society, too.
In addition, he retirement crisis we’re in now will have a negative effect on future generations. This reality led the co-founders and leaders of Ashar, Jon and Jason Mendelsohn, to consider: What can we do to help alleviate some of this tremendous financial pressure?
For the Mendelsohns, both of whom have a background in finance, it made sense to focus on life settlements.
These transactions allow life insurance policy owners who no longer need or want their policies to liquidate that asset into a lump sum of cash.
Working with financial advisors, Ashar’s team helps clients sell their life insurance policies on the Secondary Market for more than the cash surrender value, but less than the policy’s face value.
The difference between a policy’s cash value and the value it fetches on the Secondary Market can be significant.
For example, in this case study, one client of ours had a $750,000 Universal Life policy with a cash value of $3,800. Our team was able to gain the client a Secondary Market offer of $175,000, which was disbursed as a lump sum payment.
Although there are no strings attached to these lump sum payments - they’re cash available to spend however the client sees fit - many clients end up putting these payments toward long-term care or medical care costs.
That’s because these costs continue to rise, and they can quickly become burdensome even for families who’ve planned well.
Long-term care insurance can help, but it doesn’t cover everything and it eventually runs out.
Retirement savings may not be sufficient to stretch through years of long-term care facility payments, even if they’d be more than enough to cover regular living expenses.
And if a client is receiving at-home care from a family caregiver, that caregiver may be sacrificing his or her own potential earnings in order to be available.
All of these scenarios have something crucial in common: they create intense, continuous financial strain not only on the senior receiving care, but on their children and family members who are contributing to funding that care.
This is why our work is so rewarding. By helping financial advisors assist their clients, we’re able to offer these families real financial help. Instead of worrying about how next month’s nursing home bill is going to be paid, they can actually begin to enjoy the time they have together as a family.
There’s really nothing better than that.
At Ashar, we believe our team is our family (and some of them literally are). Read more about the people behind Ashar and what they’re accomplishing in our post “President of Ashar, Jason Mendelsohn, Conquers in the Ride to Conquer Cancer.”