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Rethinking boomers: Matching solutions to needs

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Gallup research indicates that while approximately 80 percent of baby boomers in their early 50s are in the workforce, the percentage employed drops to about 50 percent for boomers who are 60, and the proportion accelerates downward with each year of age thereafter.

Only one-third of the oldest boomers in the United States — those ages 67 and 68 — are still working in some capacity, based on more than 134,000 Gallup Daily tracking interviews conducted with Americans aged 50–68 in 2014.

As a related article on the Gallup website shared, the increasing size of the retired labor force of aging boomers will have the potential to affect society in many ways, including changing patterns of housing, travel and leisure, politics and retail commerce, and an increasing need for health care services.

In response to the Gallup findings, commentary published by the LIMRA Secure Retirement Institute (SRI) noted, “So much for ‘I’ll work until I drop,’ ‘retiring retirement,’ and other forms of wishful thinking. The situation might change as the less financially advantaged, trailing-edge boomers enter their 60s without generous pensions. But the basic dynamics will remain the same — most people simply do not want to, or cannot, work full time beyond their mid-60s or earlier.”

The commentary continued, “This runs counterintuitive to research findings that consistently reveal a lack of retirement readiness across a majority of pre-retirees. The Institute sees a continued need to understand this dynamic.”

I look forward to hearing more about our industry’s take on this dynamic. But regardless of the reasons behind it, I’m struck by two primary takeaways from the Gallup research and the subsequent LIMRA SRI commentary: Namely, that many people cannot work full-time beyond their mid-60s, and, furthermore, that tied to this may be a potential increase in the need for health care services.

What would the ramifications of an increased need for health care services be for the legions of middle-market baby boomers who already fear outliving their retirement income?

What would the financial implications be for them and their families if, due to a chronic or terminal illness, they have to retire even earlier than anticipated?

As a financial professional, you strive to help boomer clients meet a variety of pressing needs, including maintaining their financial wellbeing in retirement and protecting their loved ones. A veritable arsenal of products and tools exists to help facilitate those goals. And today, as a modest part of an overall balanced approach to retirement, a permanent life insurance policy packaged with appropriate living benefit riders may serve a key role in mitigating risks to client assets posed by chronic illness or longevity.

That’s important, because it’s no secret that health care costs can wreak havoc on clients’ finances. It’s also no secret that the longer clients live, the further their resources may need to stretch.

The “asset protector” solution that’s designed to address these needs enables a permanent life insurance product, when structured and funded properly, to potentially provide cash should chronic illness or death occur, and generate cash payments at a specific age if neither chronic illness nor death occurs. Given its blend of consumer-friendly guarantees, pricing efficiencies, and “optionality,” it may just transform the way Americans regard, buy and utilize life insurance.

Toward the goal of supporting boomer clients, keep in mind, as well, that carrier innovation in index universal life insurance (IUL) products has resulted in robust, customizable protection and unique ways for clients to access cash value in their policy, without diminishing the initial death benefit. Today’s IUL is definitely not yesterday’s IUL.

Additional and more sophisticated product choices for consumers result in the need for more education so the financial professional can remain apprised of appropriate options, but that should be welcomed news. After all, emerging products provide more than just expanded choice for clients; they provide opportunities for financial professionals to more closely match solutions to needs. And that’s what we’re all in this business to do.

See also:

How to help the Sandwich Generation find a financial balance [infographic]

How (and why) indexed universal life really works