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Bust for the Boomers?

What we’re learning about Boomers’ preparedness for retirement is alarming—and a huge opportunity.

By David F. Woods, CLU, ChFC, LUTCF, NAIFA CEO

“Fifty million Frenchmen can’t be wrong.” —Texas Guinan

But 78 million Baby Boomers can and are well on their way to being wrong. Here’s the story:

They were born between 1946 and 1964, and will reach “normal” retirement age between now and 2030. We are all well aware of two important issues: their woeful lack of retirement savings, and the huge opportunity we have to reinvest their 401(k) money into other vehicles, particularly immediate lifetime annuities.

Without a doubt, this market and the opportunities it presents are extremely appealing because the sales are relatively easy to make—especially compared with the sale of life insurance.

But think about this: LIMRA reports that the average amount of life insurance a person holds equals a little over three times his salary. According to some studies, the average 60-year-old worker has less than $100,000 in savings, including retirement savings! Putting aside the obvious “shame on them” comments, think for a moment what this means for retirement planning:

  • Retirement will have to be delayed and perhaps never fully realized until a Boomer’s health forces it. Merrill Lynch reports 70 percent of Boomers plan to keep on working in retirement.
  • Survivor planning will be key because there is a better than even chance that of two people who reach age 65, one will still be alive at 92.
  • The “buy term and invest the difference” folks will find, to their horror, that both their term insurance and their investments are quickly disappearing after retirement.

Help them be right
Unfortunately, there’s not much we can do about the older Baby Boomers, but the younger ones still have a chance. After all, the youngest is only 42. At the heart of our responsibility to the Boomers, regardless of their age, is to get them beyond their fixation on term insurance and help them understand that permanent life insurance:

  • provides immediate protection for their families. (They can afford it if they understand the benefits. It’s a question of priorities.)
  • lasts as long as they do, eliminating the worry about their surviving spouse living to 92 on a rapidly disappearing income.
  • provides a wonderful nest egg of cash they can use to supplement their retirement income.
  • puts them in a position of control over their lives—money brings choices and choices mean control.

No matter what their age, life insurance provides the sound foundation of virtually every Baby Boomer’s financial plan. It’s our job to be sure 78 million of them have that insurance and don’t wind up being wrong.

David Woods is CEO of NAIFA and president of LIFE. Previously a MassMutal agent for 30 years, he has been an MDRT member since 1970. He was NALU president in 1986-87.


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