Last year, a fairly standard marketing project took a turn
that has changed the way I view retirement and retirement
planning. Though our company's clients are retirees, we have
learned that many of the financial decisions made by this
group are greatly influenced by their grown children -- baby
While in the short-term, we want to reach their 70-something
parents with our retirement offerings, we quickly learned
during a research project that in the long term, the
children of the post-war boom are much worse off than prior
generations. The baby boomers, it turns out, have saved very
little for retirement -- and they, themselves, are reaching
their "golden years."
Here are the facts from an Associated Press survey last year:
• 44 percent of Americans born between 1946 and 1965 are not
confident that they will have enough money to live
comfortably in retirement.
• More than half (57 percent) say they lost money during the
recent economic downturn.
• Many who were affected (42 percent) say that's why they're
delaying their retirement.
• While more than half (55 percent) of boomers say they have
at least some confidence that they will have the financial
resources to live comfortably during retirement, only 11
percent are deeply confident that they are financially
Baby boomers have been hit with a rash of bad luck that
prevented or slowed their savings. Company-sponsored pension
plans largely disappeared during their lifetime, and 401(k)
plans were too slow to catch on. In recent years, they have
been whipsawed by the financial crisis which halved many
portfolios just as the real estate crisis depleted home
values. Further, low interest rates have stagnated
traditional savings accounts. When you combine these factors
together, you get a large generation of Americans with low
savings rates and a nearly impossible financial mountain to
climb if they want to retire.
The situation worsens, in my opinion, when this group starts
looking for advice from financial professionals regarding
how they should dig themselves out. The overwhelming advice
is simplistic and ridiculous: Save more. How can people who
have been victimized by the financial crisis and have
trouble making-ends-meet be expected to do this? Boomers are
in crisis, and even if they had an extra few hundred dollars
to contribute to a retirement account, it wouldn't be
At the same time, mainstream financial media continue to
offer similar advice while also giving short shrift to
untraditional savings and retirement options like reverse
mortgages and life insurance settlements among others.
While these options might not be a perfect match for
everyone, the current state of affairs for many seniors and
boomers suggests that they may not have many other choices.
Let's look at life insurance settlements, as one example.
This financial planning tool comprises the sale of an
existing life insurance policy by an elderly policyholder,
for more than the current cash surrender value. A unique
alternative to surrendering a policy or letting it lapse, a
life settlement can be offered on term, whole or universal
With a life insurance settlement, the purchasing company
agrees to pay the life insurance premiums for the remainder
of the policyholder's life, and in return, the purchaser
receives the death benefit when the policyholder passes
Our company recently commissioned a survey by International
Communications Research, and we found an astounding 79
percent of respondents felt that their insurance
professional and financial planners should be informing
their clients about life insurance settlements as a means to
fund their retirement (rather than letting policy's lapse).
And, more than half (55 percent) expressed concern they will
have to continue working past the age of 65. After the
financial option of life settlements was explained to them,
nearly one third of baby boomers said they would consider
such a transaction to help fund their retirement.
While boomer savings rates are low, this generation is the
best-insured of all time. However, many people don't know
that selling their life insurance policy is even an option.
Lapse rates are estimated to be around 85 percent, so most
life insurance death benefits are never paid out. Many
boomers have a financial option that could help them pay for
retirement but don't even know it. Though untraditional,
selling an insurance policy may be the best option that
While the overall economy appears to be on the uptick, we
are facing a baby boom financial catastrophe if we don't
change how we pay for retirement and explore all possible
means to get there. Though financial tools like life
settlements, reverse mortgages or other tactics might not be
the right option for everyone, undeniably, these options
need to be acknowledged and available to seniors and
boomers. This year, the oldest boomers turned 65, and if we
don't start to rethink retirement, a whole generation of
Americans will be in economic peril during what should be
their golden years.
About the Author
Scott Page is president and CEO of The Lifeline Program, a
life settlement provider based in Atlanta, Ga. Page helped
found the life settlement industry more than 20 years ago.
Today, The Lifeline Program is leading the development of
the U.S. life insurance secondary market by offering life
settlements to seniors and fund services to a wide range of
institutions. For more information, call 770-724-7300 or
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