Many boomers are reluctant to pay for the disability insurance they need to protect their current income and their retirement income.
“They certainly haven’t aged out of the market,” says Matthew Gottfried, director of individual disability income at Berkshire Life Insurance Company of America, Pittsfield, Mass.
But older boomers, especially, tend to gamble that their luck will last until they can collect Social Security and retirement benefits.
“I don’t think that’s a wise strategy,” Gottfried says. “There’s too much at risk.”
Researchers at Berkshire, a unit of Guardian Life Insurance Company of America, New York, have published charts illustrating boomer disability resistance in a summary of results from a survey of 1,072 U.S. adults ages 18 and older.
Only 56% of boomers ages 45 to 54 and only 56% of adults ages 55 to 64 said they are willing to pay for disability coverage, compared with more than 75% of adults ages 18 to 44, the Guardian researchers report.
Boomers are more likely than younger workers to believe that they have enough savings set aside to cope with loss of income for at least a few months.
The share of participants who said they could cope with a disability lasting a year or longer was 18% for the 45-54 age group and 27% for the 55-64 age group.
The flip side is that even in the relatively asset-rich 55-64 age group, only 32% of survey participants said they have enough savings to cover 3 months of living expenses.
Some boomers may be counting on access to Social Security disability payments and generous pension plans and retirement savings plans to help them cope with lengthy disabilities.
But many affluent boomers still have home mortgages, college-age children, sailboats and golfing habits to support, and the sheer number of boomers and members of earlier generations who continue to work for pay continues to grow rapidly.
In third quarter of 2006, for example, the number of U.S. employees in the 45-54 age category was about 34 million, up 33% from the total for the third quarter of 1996, according to the federal Bureau of Labor Statistics.
The number of employees increased 65%, to 19.5 million, for the 54-65 category, and 44%, to 5.3 million, for the 65-and-over category.
Meanwhile, the Guardian survey shows there is a significant gap between boomer interest in disability insurance and boomer purchases of disability insurance.
In the 45-54 age group, for example, only 47% of the participants said they use payroll deductions to pay for coverage.
In the 55-64 age group, only 28% of the participants have employers deduct disability insurance contributions.
Older workers often have to pay more than younger workers for disability coverage, particularly for voluntary supplemental coverage, but they also have a greater chance of using the coverage.
Berkshire has been trying to persuade workers to buy extra disability insurance coverage to protect an asset that should be close to the hearts of affluent boomers: retirement plan assets.