You’ve always set aside money to prepare for unexpected emergencies and have saved for your golden years. But will your nest egg last through retirement? According to a Retirement Income Literacy Survey conducted by the American College of Financial Services, the short answer is “no.”
The survey interviewed 1,244 Americans, all between the ages of 69 and 75, possessing at least $100,000 in household assets, not including their primary residences. Three out of four respondents failed a quiz designed to evaluate their ability to make their nest eggs last through retirement. Furthermore, the report indicated that respondents were unclear about topics such as long-term care expenses, investment considerations, strategies for sustaining income throughout retirement, and life expectancy. Only 33 percent understood that working for two extra years would do more to improve their retirement security than increasing their retirement account contributions by 3 percent during the last five years of their careers. And only 38 percent were aware of the “4 percent rule,” a common guideline for the percentage of your retirement accounts’ assets you can safely withdraw each year.
“Retirees are living much longer, so there’s a need for smart advice around how to turn consumers’ nest eggs into something they can live on for up to three decades or longer in many cases,” according to American College of Financial Services Retirement Income Program co-director Jamie Hopkins in the organization’s press release on the retirement income study.
Another consideration regarding retirement and financial security: Retirement often isn’t a choice. Some people plan to work into their 70s or even 80s, yet 60 percent of workers end up retiring sooner than expected. The reasons vary, ranging from job loss to health concerns. Regardless, the time to plan for retirement and your financial security is probably now versus later.
What you can do
First, learn as much as you can in advance about what to expect financially when you retire — when you’re not bringing in a steady stream of income. One sensible move is to meet with a financial planner, ideally well before you reach retirement age.
Second, know where you stand. Develop a retirement budget. Compare it to the income you can reasonably expect from your savings, Social Security, and other sources. Your retirement budget should show you how much you’ll require to draw down your savings each year — and let you know now if you need to make changes to your savings strategies before retirement.
If you need to know more about how the value of life insurance that you already own, Ashar Group can help. You might find that your financial needs would be best served by a life settlement, a process that allows you to unlock the value of a life insurance policy you no longer need and receive a lump sum of cash that is greater than the surrender value of the policy.
Ashar Group has brokered life settlements in which the policy owner received as much as 8x the policy’s cash surrender value. You, or your financial advisor, can take our 7-question policy value quiz to get an idea of whether your situation may qualify for a life settlement solution.
We’re secondary market and valuation specialists whose experts adhere to the highest ethical standards, and we invite you to contact us today.
Category: Financial planning