The Senior Market May Be Younger

Than Many Advisors Think

A few years ago, older folks were going around joshing about whether they were “young old,” “old,” or “old old.”

Perhaps not surprisingly, how people categorized themselves had nothing to do with chronological age. People in their late 70s would respond “young old,” while people in their 50s often replied, “old.” True, they were laughing as they did so. But it is worth noting that no matter which category a person chose, he or she was still identifying with the concept of being old.

Today, it often seems it is not politically correct to use the word “old.” Yet, once people reach the age where they are mulling over where they fit on the old spectrum, it is safe to say they are part of the traditional senior market.

But how to reach that market? That is a question many in the financial services industry are increasingly asking.

The traditional senior market typically has been considered the prime target for such products as annuities, long term care insurance, IRAs and Medicare supplements, just to name a few.

There is no denying that many people in their 50s, 60s and even 70s may benefit from purchasing one or all of those products. With the exception of Medicare supplements, though, some prime targets for traditional senior products may actually be much younger.

Many financial professionals bemoan the fact that younger clientsthose in their 30s and 40soften do not have the time, energy or money to think about their senior years. That is because younger people are so caught up in the very necessary tasks of advancing their careers, buying homes and raising families.

Ironically, the best time for clients to procure insurance and financial products for their senior years is in their 30s and 40s and, some might say, in their 20s.

When we couple that with the fact that many people would like to retire earlier than the traditional age of 65, it becomes clear that the market for senior products may be younger than many people think.

The question is how can advisors help younger clients see it is in their best interest to prepare for their senior years now?

For long term care insurance and various types of life insurance, the obvious answer is to remind younger clients that the likelihood of being approved for these types of insurance and for paying lower premiums depends on age and health status.

It goes without saying that younger and healthier clients will be more likely to be approved and to pay lower premiums. In the case of LTC insurance, older clients in their 50s or 60s often discover that something in their health histories will prevent them from purchasing any coverage at all–never mind being charged a higher premium. Such outcomes are fairly rare at the younger ages.

As far as annuities, IRAs and other asset accumulation products go, the advisors biggest ally for helping convince younger clients of the value of these products is the time value of money. The advisor can point out that a small change in daily financial habits can add up to big dollars in retirement savings over the course of 25 or 30 years.

One common example that often is used to demonstrate this is to look at what happens when a person foregoes one $3 specialty coffee a day. In just one year, the savings could reach more than $1,000. Many times, advisors plug that example into a time-value-of-money calculator to show how that simple change can result in tens of thousands of dollars over the next 30 years.

Younger clients always will have competing demands for their money, so providing them with this information wont necessarily result in instantaneous interest on their part. However, advisors who provide the relevant brochures or other print materials will be planting a seed for the future, perhaps the near future.

Many experts believe that lack of planning and poor financial education have caused many seniors to be worried about their financial health and well-being, and justifiably so.

To address this concern, a number of the largest financial services companies now sponsor a variety of publications, Web sites and televisions shows that provide financial education and financial planning information to the public. Perhaps the biggest favor the financial services industry can do is to urge younger clients to use these various financial resourcesso they can make the right financial choices for their senior years, starting today.

Kristen L. Falk, FLMI, AAPA, ACS, AIAA, AIRC, ARA, is a senior writer with LOMA in Atlanta, Ga., specializing in annuities and financial planning. Her e-mail is falk@loma.org.


Reproduced from National Underwriter Edition, April 16, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.