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The Glass Mirror of Retirement

Updated: Jul 6

Retirement is a major life event that many Americans look forward to. After a lifetime of hard work, retirement is often seen as a time to relax, travel, and spend time with loved ones. However, for many Americans, retirement can be a source of stress and worry because they have not saved enough money to support themselves during their golden years. In fact, a significant number of Americans retire without enough money to cover their basic living expenses. In this blog post, we will explore the reasons behind this problem and what can be done to address it.

According to a report by the National Institute on Retirement Security (NIRS), nearly two-thirds of working Americans are not saving enough for retirement. This is due to a combination of factors, including stagnant wages, rising costs of living, and a lack of access to retirement savings plans. As a result, many Americans are entering retirement with little to no savings, and are often forced to rely on government programs like Social Security to make ends meet.

One of the main reasons why Americans retire without enough money is the decline of traditional pensions. In the past, many employers offered defined benefit plans, which provided workers with a guaranteed income in retirement. However, these plans have become increasingly rare, with many companies opting for defined contribution plans like 401(k)s instead. While these plans allow workers to save for retirement on their own, they also put the burden of retirement planning and investment management on the individual, rather than the employer.

Another factor contributing to the retirement savings crisis is the rising cost of healthcare. As people age, their healthcare costs tend to increase, and many retirees find themselves struggling to pay for medical expenses. This can quickly deplete a retiree's savings, leaving them with very little money to cover their other expenses.

So, what can be done to address this problem? One solution is to increase access to retirement savings plans. Currently, many workers do not have access to employer-sponsored retirement plans, which makes it difficult for them to save for retirement. Expanding access to retirement plans, and making it easier for workers to enroll in these plans, could help more Americans save for retirement.

Another solution is to increase financial education and literacy. Many Americans simply do not understand how to save for retirement or how to invest their savings. By providing more education and resources on retirement planning, Americans could be better equipped to save for retirement and make informed investment decisions.

Of course here at Living Legacy Financial Solutions we lean towards life insurance as a practical option for many to supplement their retirement; it can be a great tool to supplement retirement income for a number of reasons. First and foremost, life insurance can provide a source of income for your loved ones in the event of your untimely death. This can help ensure that your family is able to maintain their standard of living and cover expenses like mortgage payments, education expenses, and other bills.

However, life insurance can also be used as a tool to supplement retirement income. There are a few different ways that life insurance can be used in this way:

1. Permanent life insurance policies, such as whole life or universal life, have a savings component that allows policyholders to build cash value over time. This cash value can be accessed during retirement to supplement other sources of income.

2. Life insurance policies can be structured to provide regular income payments to the policyholder during retirement. This is known as a "life insurance retirement plan" or LIRP. With an LIRP, the policyholder pays into the policy during their working years and then receives tax-free income payments during retirement.

3. Life insurance policies can also be used as a legacy planning tool. By naming beneficiaries and leaving a death benefit to loved ones, policyholders can help ensure that their heirs are financially secure after they pass away. This can provide peace of mind during retirement and alleviate concerns about leaving behind a financial burden for loved ones.

In addition to these benefits, life insurance can also provide tax advantages that can help supplement retirement income. For example, the cash value within a permanent life insurance policy grows tax-deferred, which means that policyholders do not pay taxes on the growth until they withdraw the money. This can be a valuable tool for those looking to minimize their tax burden during retirement.

Overall, life insurance can be a great tool to supplement retirement income for those who are looking for additional sources of financial security. It's important to work with a financial advisor or insurance professional to determine the best type of policy and coverage amount for your individual needs and goals. Click on our services tab, and let us know how we can help.

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