For insurance agents serving the growing opportunities within the baby boomer and retiree markets, the new year is an important time to recommend that boomers assess any future risks that may impact their lives. They need your help taking a closer look at the range of choices available to help them successfully manage these risks so that their assets are protected, and helping boomers design and implement an asset protection plan is one critical way that you can help them avoid difficult financial challenges down the road.
Retirement expectations versus reality
You should keep in mind that boomers' retirement plans often do not unfold as planned. For example, even though many baby boomers expect to continue working into their retirement years, recent research shows that this is often does not happen. According to McKinsey research, almost half of all baby boomers expect to work past age 65, but only 13 percent of current retirees have done so. Additionally, 40 percent of the retirees surveyed were forced to stop working earlier than planned for reasons that included personal sickness or injury, job loss, and caring for aging parents or relatives. The research also indicated that those about to retire greatly underestimate their retirement expenditures, which, for those who put off retirement planning, means there is a greater chance that their assets will be impacted. The difference between expectations and reality can set the stage for financial challenges if risks are not understood and managed.
What boomers should consider before retirement
With an estimated 78 million people expected to retire in the coming years, you may want to recommend to your boomer clients that they consider any potential risks when they're examining the myriad options for retirement planning. Today's boomers face markedly different retirement risks than past generations. Reduced or eliminated retiree benefits from employers, longer lifespans, chronic health conditions that can make insurance costly or result in a denial, higher health care costs, and an ever-changing economy make it that much more important to plan now in order to minimize future risk.
Additionally, because retirees often want to live within a "fixed income" category, it's important that you work closely with pre-retirement boomers. You should certainly help them plan ahead and identify ways to control costs and improve benefits or reduce out-of-pocket expenses so they are not forced to dip into assets should unexpected medical costs arise.
Tips for managing risk
Supplemental insurance programs can provide a good foundation for protecting assets and helping prevent financial crises. There are several important issues that you and your clients need to take into account when looking at supplemental programs as a part of their overall retirement plan.
o Health care policies can protect assets. Boomers should check into supplemental health care products that help them control costs, improve benefits, and reduce out-of-pocket expenses. It is important to recommend that boomers look at their short-term health insurance needs and determine if they face added risk from potential gaps in basic Medicare coverage.
o Plan today for tomorrow. Boomers should begin planning early to lock in insurability and lower costs, as risks and costs increase with age.
o Asset allocation via needs assessment. You may want to recommend that boomers conduct a needs assessment to determine where to allocate their assets. A balance of supplemental policies that encompass health insurance, prescription drug insurance, long-term or critical condition care, and final expenses is a solid strategy for protecting assets.
If you can help your baby boomer clients understand the risks that they may face during retirement, they just may achieve the post-retirement lifestyle they desire.
Jim Campbell is a senior vice president with Sterling Life Insurance Company. For more information, visit www.sterlingplans.com or call 888-858-8546.
