Past economic crises, hurricanes, high oil prices, tensions with North Korea, Chapter 11 filings, the “War on Terror,” and other major events can play havoc with our at-risk money. So, it’s not surprising that many people want to quit worrying and play it safe. But, it is often a balancing act, and that's where we, as consumers, have to analyze our individual situations, ideally with the help and guidance from a professional advisor.
Let's look at some facts and factors that have brought many of us to our current situation. Social Security, for example, was never intended to take care of all nor even most of our retirement needs. The tax for Social Security was approximately $ 50 per year from 1935 to 1955. Why? Because most people only received benefits for an average of six months, if they actually lived to 65!
Second, since more than 60,000 people will live past 100 next year, we all should take a closer look at payout products, such as an immediate annuity. Many people, for instance, need to turn their 401k dollars into immediate income products. They may also do the same with indexed annuities that have guaranteed lifetime withdrawal benefits.
Here’s another vitally important area of consideration: Our nursing home or home health care needs may also increase. Did you know, for example, that a female spouse is really more at risk, and that more women go into nursing homes or need home health care? Why? Women live longer. Furthermore, men usually can't take care of women, though most women will do everything possible to keep their husbands at home. So make sure that you either have a long-term care product, annuities with nursing home riders, liquidity features, and life policies that allow you to accelerate the benefits whether it's home health care or a nursing home.
Next, we all need to review our insurance portfolios. Do we have adequate life insurance? And what if we used a portion of the penalty-fee withdrawal in the annuity to fund a life policy? Remember, too, that the majority of our lifetime medical expenses will occur in the last six months of our lives! Therefore, we need to reexamine everything. You need to talk to your financial professional and have him or her go over these facts with you. When you're talking to your advisor, make sure you explain and emphasize how long it took you to accumulate your nest egg and how long you think it will last if you're in a nursing home. You’d be amazed at how many “elder youngsters” don't sit down and look at these kinds of possibilities. Many of them have never understood what a balancing act they may have to perform to guarantee a long and happy retirement.
So, please, use this springtime as an opportunity to discuss, analyze, and look in detail at your current financial situation. This may just be the perfect time to start playing it safe.