Closing the Retirement Savings Gap
Exploring Innovative Solutions with Insurance Products to Address the Retirement Savings Gap
As we peer into the future, the specter of the “silver tsunami” looms large, revealing a disconcerting trend in retirement planning. Research paints a stark picture, projecting that gaps in investors’ retirement savings are set to surpass hundreds of trillions of dollars in the US by 2030!
This looming shortfall in the retirement savings gap underscores the urgent need for innovative solutions to bridge these chasms and ensure individuals’ financial security in retirement.
In this article, we delve into two intriguing insurance products—permanent life insurance (PLI) and deferred income annuity with increasing income potential (DIA with IIP).
Understanding the Retirement Savings Gap
The retirement savings gap is like an ample space between how much money people have saved for retirement and how much they need to live comfortably when they retire. There are a few reasons why this gap exists. First, people are living longer, meaning they need more money to cover their expenses for longer. Second, healthcare costs eat into people’s savings.
Finally, many people aren’t saving enough for retirement, which adds to the problem. If we don’t do something about it, many retirees might struggle to make ends meet and have a more challenging time enjoying their retirement years.
Exploring Permanent Life Insurance (PLI)
Permanent life insurance offers a unique combination of death benefit protection and cash value accumulation. Unlike term life insurance, which provides coverage for a specific period, PLI offers lifelong coverage, making it an attractive option for individuals looking to protect their loved ones and build savings over time. PLI policies also offer potential tax advantages, such as tax-deferred cash value growth and tax-free access to policy loans and withdrawals.
What are Deferred Income Annuities with Increasing Income Potential? (DIA with IIP)
Deferred income annuity with increasing income potential represents a new generation of annuity products designed to provide guaranteed income for life with the potential for income growth over time. Unlike immediate annuities, which begin payments immediately after purchase, deferred income annuities start payments later, allowing for more significant income growth potential. DIA with IIP offers additional benefits such as persistency bonuses and non-guaranteed dividends, enhancing the income potential for retirees.
Value Proposition of Integrated Insurance Products
By incorporating PLI and DIA with IIP into a retirement plan, you can unlock significant value beyond a traditional investment-only strategy. PLI offers tax-efficient savings growth and death benefit protection, while DIA with IIP provides a reliable income stream to supplement other retirement savings. Together, these products offer a comprehensive approach to retirement planning, addressing both savings accumulation and income protection needs.
Considerations and Caveats
“While PLI and DIA with IIP offer compelling benefits, it’s essential to consider factors such as cost, suitability, and liquidity before incorporating them into a retirement plan,” warns Daniel Lerner, Executive Vice President, Investment Services at David Lerner Associates.
“Individuals should work closely with a financial advisor to evaluate their options and determine the most suitable strategy based on their unique circumstances and goals.”
As the retirement savings gap widens, individuals may want to explore innovative solutions to safeguard their financial future. PLI and DIA with IIP represent potent tools that help investors bridge these chasms and achieve retirement goals. By integrating these insurance products into a comprehensive retirement plan, individuals can enhance their savings growth, protect their income, and secure a more confident retirement journey.
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.