A common stress we hear from advisors is the anxiety adult children in their 30s to 50s experience when talking to their parents about aging, future caregiving needs, and health changes. A significant concern in these conversations is the financial independence—or potential dependence—of their parents.
Will your clients outlive their retirement funds?
With retirement evolving significantly in recent decades, longevity has become a critical element of financial planning. With people living longer, continued inflation, and rising healthcare costs, outliving one’s retirement plan is a real concern.
This is why addressing health, longevity, and long-term care must be an integral part of every retirement planning session with senior clients. Here are some ways to initiate these important conversations.
1. Personalize Life Expectancy: The Foundation of a Solid Retirement Plan
No two clients are alike, so a one-size-fits-all approach won’t work for longevity planning. Many advisors use age 95 as a standard life expectancy in retirement projections because it’s conservative. However, more advisors are using longevity calculators to craft plans specific to each client’s health, lifestyle, and family history. This ensures that the plan reflects a more realistic life expectancy and avoids underestimating retirement needs.
When discussing longevity, consider asking questions like:
PRACTICE TIP: When considering whether to keep or surrender a life insurance asset, rely on independent experts who can value a life insurance policy based on the premiums and projected life expectancy. This process can uncover information that provides direction to planning.
2. Long-Term Care Projections: Why Longevity Matters
People are living longer—and that’s great news! But longer life spans can strain a financial plan that wasn’t designed to support decades of post-retirement living. Clients could face cash flow shortages in their later years without proper projections.
Consider a scenario where a client lives to 70 but requires long-term care in their final years. That client may spend more during retirement than a healthier individual who lives to 90 but doesn't need expensive care.
With nursing home costs averaging more than $100,000 a year, even partial reliance on Medicare and Medicaid may not be enough to cover long-term care expenses. This makes it vital to discuss health history, family health patterns, and potential longevity with your clients. It’s also essential to have open conversations about how they plan to fund care during their later years.
A conversation starter could be:
PRACTICE TIP: You can help take pressure off the adult children by helping their aging parents repurpose their life insurance and eliminate future premium obligations to pay for caregiving needs.
3. Longevity-Related Solutions: Funding Retirement and Long-Term Care
As the longevity economy grows, an increasing portion of the population will reach advanced age, potentially placing financial strain on younger family members. It’s crucial to explore various solutions for financing long-term care and late-stage retirement needs.
One option to consider is life settlements. A life settlement allows a policy owner to sell their life insurance policy for a lump sum of cash, often much higher than the cash surrender value. This transaction provides liquidity and eliminates future premium payments, freeing up funds for retirement, investments, or care needs.
Discussing this option with your clients might sound like:
PRACTICE TIP: Partner with an independent life settlement resource who has a fiduciary duty to your client and facilitates a secure policy auction that drives competition, guaranteeing the best offer.
In Conclusion
Conversations around longevity, health, and long-term care are essential for building comprehensive and realistic financial plans for your clients. By discussing these topics, you can help ensure your clients are financially prepared for a longer retirement and the potential care costs that come with it. Taking the time to understand each client’s unique circumstances will not only lead to better planning but also build trust and peace of mind for the future.
Historically, uncertainty in financial markets increases life insurance lapse activity. Think about your parents and the large number of baby boomers who are retiring every day or already retired. What are they worried about?
According to the 2023 Transamerica Center for Retirement Studies Report, the most often cited retirement fears are declining health that requires long-term care (36%), Social Security will be reduced or cease to exist in the future (36%), outliving their savings and investments (35%), possible long-term care costs (30%), not being able to meet the financial needs of their family (30%), and cognitive decline, dementia, Alzheimer’s Disease (29%).
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Schedule a 15-minute call to discuss how we help you integrate life settlements into your client conversations.
In a recent conversation, an advisor shared the tension and anxiety related to adult children in their 30s to 50s having conversations with their parents about aging, future caregiving needs, and health changes. A key factor is financial independence or dependence on the family.
As retirement has changed over the past several decades, longevity has become a vital component of financial planning. With people living longer, continued inflation, and rising healthcare costs, outliving one’s retirement plan is a real concern.
This is why a frank discussion about health, longevity, and long-term care needs to be part of every retirement strategy session with your senior clients. Here are a few thoughts to get the conversation started with clients.
What type of information is discussed or gathered in ongoing planning discussions with clients? Many advisors use age 95 as a standard life expectancy for retirement planning because it’s a conservative estimate. When it comes to finances in one’s advanced years, being conservative is important. However, to develop the most sustainable financial plan, some advisors have opted to use a longevity calculator instead of the industry standard for every client. This will allow you to create a more personalized plan for every client.
Consider including the following question on planning checklists about physical and mental health, lifestyle, and their vision for what their life looks like in their late 80s to 90s.
"If there was a change to your health, where do you see yourself living? At home or in a community with others your age? Does this change if one spouse passes before the other?"
The good news can sometimes be the bad news. It's wonderful that people are living longer than anticipated, but often, their financial plan did not project them living into their late 80s to 90s. What if the planning is running low on cash flow? Retirement-age client’s health history and outlook are vital when it comes to effective retirement planning.
For example, a client who lives only to age 70 but spends the last five years of life in a long-term care facility could very well end up needing more money in retirement savings than a healthy person who ages in place and lives ten years longer.
Long-term care has become financially burdensome for most families, and those expenses continue to grow.
Since Medicare and Medicaid cover only a percentage of the care most people entering nursing facilities need, seniors - and their families - are left to make up the difference. With annual costs for a private room in a nursing home close to $110,000, that difference is often significant.
Having an open discussion of your client’s health history, family health history, and longevity expectations can help set realistic goals regarding how much they may need to cover long-term care.
"How are you planning to pay for those later years? The average cost can range between $5K- $10K per month for any higher quality option."
Over one-third of the country will be part of the longevity economy, which in turn could financially impact the remaining two-thirds of the country. How are families prepared to address the potential cash requirements for their aging parents and loved ones? This is also a good time to bring an alternative for paying for long-term care – life settlements. This solution allows clients to sell their life insurance policy for a lump sum of cash that’s greater than the policy’s cash surrender value.
On average, a life settlement transaction using a competitive auction platform through an independent life settlement broker can earn your client 5x the cash surrender value. This not only creates liquidity but also eliminates future premium obligations, allowing those funds to be used for other planning needs like retirement, investments, and long-term care.
"Do you foresee your adult children or someone else assisting in paying for long-term care? Have you explored all available options to fund these needs?"
Longevity Throws a Wild Card in Even the Best-Laid Plans
Society of Financial Service Professionals
by Jamie L. Mendelsohn, EVP, Ashar Group
Ashar Group is a nationally licensed life settlement firm representing the best interests of policy owners by creating a competitive policy auction to deliver the best value to the seller. Ashar Group does not sell life insurance, management assets, or purchase policies. We are an independent resource for fiduciary advisors and their clients specializing in life insurance valuation for planning purposes. Contact us today.
Enjoy more blogs in our Longevity Series:
Shooting for the Centenarian Club
The Keys to Longevity – It’s Never Too Late but Start Now!
Your client’s life insurance policy may be the most valuable asset they own.
Seniors in retirement often drop their life policies. The reasons are many; the original need may no longer exist, they may need to eliminate expensive premium payments, or they just need some additional liquidity to help with medical costs and retirement needs. There could be a better way...
A life settlement is the sale of an existing life insurance policy for more than the cash surrender value and less than the death benefit.
Five Common Life Settlement Scenarios:
Who has the best chance of qualifying for a life settlement?
Anyone age 65 or older who has developed health issues since their policy was issued and owns a universal life or convertible term insurance policy has a high probability of benefiting from selling their policy. Policies with a death benefit of $250K or more can qualify. Even policies used in estate planning and business protection with death benefits from $2M - $100M can qualify. Younger policy owners with serious chronic illnesses can also explore the life settlement option. There are many scenarios where a client could qualify for a life settlement.
PRACTICE TIP: Never surrender a life insurance policy without first checking for life settlement value!
Ashar Group is a nationally licensed life settlement firm that acts as a fiduciary to protect the best interests of policy owners by creating a competitive policy auction to deliver the best value to the seller. Ashar Group does not sell life insurance, management assets, or purchase policies. We are an independent resource for fiduciary advisors and their clients specializing in life insurance valuation for planning purposes. Contact us today.
Divorce rates are on the rise - but not among younger couples, as one might expect. Instead, the increase is among couples who are ages 50 and older. According to the US Census Bureau, divorce rates among adults ages 55 to 64 are about 43% and have increased since the 1990s.
While divorce at any age is a complicated and emotional process, divorcing when you're over the age of 50 has some bleaker financial consequences than it might for a 25- or 30-year-old. That's because divorce almost always has a negative effect on a person's lifetime financial state. If you're close to retirement when you divorce, there's much less time to recover.
There are a couple of reasons for this. Women are more financially independent, which allows them to divorce without facing as stark of a financial picture as they once did. Additionally, as longevity increases, the overall length of marriage is longer. This on its own puts couples at a higher risk for divorce. Here are a few things to consider if you're among one of the many adults getting divorced after age 50.
Retirement accounts are usually considered marital property.
Preparing for retirement takes decades of planning and saving by contributing to a 401(k) or IRA. In most states, funds that you contributed to a retirement account over the course of your marriage are considered property and assets. This means that when you divorce, that money gets split between the two of you.
What was once enough to cover a single mortgage and utilities for a single household, might not be enough now that it must cover two separate households. The implications of this are profound, including the possibility of delaying retirement a few years or working part-time while retired.
Does keeping the house make sense?
During a divorce when the house is nearly or fully paid off, is keeping the house the right decision for either party? The house has a value, which means that your ex-spouse will receive some property equal to that value, and it might be retirement or savings accounts, future payments until that amount is met, or a life insurance policy.
In addition, a home comes with considerable costs that might stretch your already reduced retirement savings beyond their limit. Such as repairs, homeowner's insurance, and more.
Alimony is typically granted if the marriage has been a long one.
When marriages last a specific length of time, you can expect a form of alimony or spousal support to come into play. Divorces that end shorter marriages often include some kind of payment for a short time to assist the less well-off spouse in recovering.
Separating from your spouse can wreak havoc on not only your emotional life but your financial one as well. If you are going through this difficult event, thinking about money is probably the last thing you want to do - however, if you don’t, you could find yourself in a highly precarious financial situation once the divorce is final.
If you retain ownership of a life insurance policy during divorce negotiations that has become unnecessary, or a burden, you may want to consider a life settlement. Selling your policy for an amount greater than the cash surrender value can provide a significant liquidity event allowing you to bridge the gap in earnings.
Life settlements are an underutilized option that can be very helpful for seniors in certain circumstances. To learn more, read more about how this option can be beneficial for policy owners, or contact us today.
Retirement is more than just turning in your notice at work and packing up your desk. Beyond looking at your finances, there is other planning that should go into the decision to retire.
Define "retirement".
What does retirement look like to you? Are you sitting on the beach somewhere or traveling the world? Many people know what they are retiring from, but they don't always think about what they are retiring to. Write down your retirement goals - don't say just "travel" but instead "cruise to Cancun" or "bus tour in European countries".
Many people find themselves in financial trouble after retirement because they didn't weigh the opportunity costs of their ideal life: they'll move to the west coast for good weather but rack up high travel costs to see their grandchildren in the Midwest every other month, for example.
Be realistic about costs of hobbies: many financial planners predict you'll spend less in retirement than you did previously, but a pricy hobby (like college classes or sailing) can often derail the best-laid budget.
Improve your health.
Just before your retirement date, it is best to see all your healthcare providers. While at your appointment, ask your providers to help develop a plan to keep you fit and alert during your retirement years. Commit to the suggestions, whether they are eating two green veggies a day, walking around the mall a few times a week, flossing, or doing brain games to stay sharp.
Find any opportunities for added income.
Look for opportunities to turn your hobbies into profit. You can sell your crocheted blankets to friends, teach piano to the neighborhood children, or turn your business skills into a consulting job. Many people get bored after a few months of retirement and actually prefer partial-retirement, in which they pick up part-time jobs. Remember, retirement doesn't have to mean not working; it's just having the freedom to do what your want when you want.
If you don't want to continue working during retirement, another option is to sell your unwanted or unneeded life insurance policy in a life settlement. A life settlement can create a significant liquidity event that can fund your retirement goals; however they look. To see if your policy could potentially qualify for a life settlement, take our Policy Value Questionnaire. For more details about life settlements and policy valuations, contact us today.
Nearly 90% of financial professionals with senior clients have never helped guide them through a life settlement transaction according to a recent poll we conducted. And only 13% had their clients' life insurance appraised within the last six months. This lack of education means there is a lot of money being left on the table each year when policy owners lapse or surrender policies that could have had value as a life settlement.
On the client's side, money is tied up in burdensome premiums when the policy could be liquidated into a lump sum payment to the policy owner. On the advisor's side, money is lost in business growth opportunities. Beyond that, there are a few other reasons financial professionals need to familiarize themselves with life settlements.
Statistics show a majority of today's seniors are financially unprepared for retirement.
According to a Bankrate.com survey, 21% of respondents have nothing saved for retirement. As so many news outlets have reported over the past several years, this is nothing less than a retirement crisis. In addition to living costs, many seniors will need to pay for long-term care or costly medical treatments in retirement. If they aren't able to cover that cost themselves, it could fall on their children or other family members,
A life settlement can provide the cash these seniors need today. In these cases, liquidating a costly, unnecessary life insurance policy can ease the financial burden on the policy owners and their families.
A life settlement can create up to 8x more value than the cash surrender value.
A life settlement is the sale of an existing life insurance policy for a value greater than the cash surrender value and less than the death benefit to an institutional buyer. The key to receiving fair market value for your clients is partnering with a licensed life settlement broker, such as Ashar Group.
Through Ashar's proprietary auction process, we submit the policy to all licensed buyers creating a competitive bidding environment to drive up the value of your client's policy. If your client's policy qualifies for a life settlement solution, why surrender the policy for a mere fraction of its value?
Knowing all the options available to your clients is simply the right thing to do.
At Ashar, we believe in a simple principle: "do what is right and you will be blessed." Everyone., especially seniors and their advisory team, need to know what financial options are available to help them thrive in their later years. A life settlement can be an advantageous alternative to lapsing, surrendering, or materially changing a policy. The more financial experts know about the industry we serve in, the better we're able to educate and serve our clients.
If you'd like to find out more about life settlements, watch our video, which gives an overview of what we do and how we do it. And if you're ready to find out if a client's policy might qualify for a life settlement solution, take our Policy Value Questionnaire.
Life insurance in retirement can be a tricky topic to navigate for planning professionals. The biggest question we hear from advisors and their clients is, “How can this policy benefit me while I’m retired?” To which our response is typically about how that depends on the client’s financial goals which have been determined with their financial professional. There are several ways in which a life insurance policy can benefit you while in your retirement years.
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Unless you’re a finance geek—like all of us here at Ashar—there’s not a whole lot about managing one’s finances that could really be called “fun.” Monitoring investments, keeping track of bills and taxes…for most people, that’s more obligation than choice. (more…)
This post is part of our series for advisors to pass to their clients. Knowing more about your clients’ needs will help you to better serve them. Aging doesn’t have to be scary, and we here at Ashar want to help you provide the resources that policy sellers need to flourish in this chapter of their life.
At Ashar, we may be in the life settlement business, but that doesn’t mean that we think everyone should sell their life insurance. In fact, that’s about as far from the truth as you can get.
Life settlements can be wonderful financial solutions for many people, but only under a set of very specific circumstances. For people looking for financial relief from unaffordable premiums, or those who no longer need their policies because of changes in estate tax law or the death of a spouse, a life settlement can be a great way to generate a new stream of income. The same is true for individuals facing the costs of long term care, or expensive medical procedures for an illness.
If you fit into one of these categories, maybe it’s time to ask your financial advisor to contact us at Ashar, to start discussion your options. But if you don’t, then chances are you should keep your life insurance, if it’s at all possible.
