While insurance leads typically derive from people who are in need of health coverage, they also stem from individuals who may be struggling financially or who fear that they could be in that situation at some point in their lives. And as a recent study shows, these unfortunate situations can often materialize in retirement.
According to a new report from the Society of Actuaries, many Americans are in financial situations that will require them to cut back significantly by the time they retire, forcing them to diminish their standard of living. In fact, some people make retirement decisions based on cost averages, but using this method increases the risk of running out of money.
In order to retire successfully, SOA studies show that moderate to higher income households can retire with 20 percent less savings, provided they cut their elective spending by about 15 percent.
Buying an annuity is also advisable but not in lieu of an emergency fund. Both sources should be contributed to throughout a given retirement period.
Anna Rappaport, actuary and co-author of the report, "Measures of Retirement Benefit Adequacy," said that young Americans especially need to weigh their post-career decisions carefully and not assume that everything will work out for the best, as it won't if they don't adequately prepare.
"Many of the next generation retirees are facing a big drop in their standard of living when they retire and individuals need to be aware that attempts to over-simplify the retirement planning process can be very dangerous if used for personal decision making," said Rappaport.
She added that fewer than 33 percent of households with a median level of income will die with a surplus of money in their bank accounts.
Agents may want to advise their insurance customers about the importance of life insurance, what it is and why it's best to purchase it at a young age. Recent polling data from LIMRA reveals that many people aren't as familiar with life policies as they ought to be.