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One million dollars. That’s how much expert analysts are saying most retirees need in order to successfully retire. Most Americans are simply nowhere near that.
The reason? It’s because the Feds have kept the interest rate at rock bottom (0%) for so long. And while they just announced quarterly rate hikes for 2016, it’s unfortunately too little, too late. In order to have a sound, balanced portfolio of retirement investments, a retiree will need $1 million in various investments in order to get just half of their retirement income from investments. Otherwise, you’re looking at risks that are simply too great to rely on for a sound future.
The new rate hikes could help future retirees lower that number, but realistically, we’re looking at a long time before we start to see it decline much. And for Boomers who are already in or are looking at retirement very soon, there’s a high risk of outliving their retirement savings.
Between 1990 and 1997, the magic number was between $200,000 and $300,000. Adjusted for inflation, that amount today would only earn roughly 8-16% of a household’s costs.
Now, many people are looking at other alternatives to simply retire. Those options include working longer or getting a part-time job in retirement, taking more risk on their investments in hopes of a higher payout, and simply saving much more money. But none of these options is ideal, and there are only so many years that a person can continue to work—and only so much they can save.
Another option that some consider is converting non-liquid assets to cash. This allows for more liquidity, and the opportunity to find other, more lucrative investment opportunities. At the same time, it can provide much needed cash to help pad the existing retirement account, making it much easier to live comfortably in retirement—and worry about money less.
The best example of turning a non-liquid asset into cash is a life settlement. If someone has a life insurance policy that’s underperforming, or they simply no longer want or need, the policy can be sold for cash in a life settlement. In addition to the cash, it also frees the retiree of the burden of a monthly premium.
Now that interest rates are set to go on the rise again, things may start to improve for retirement accounts. But it will be a slow process, and many retirees don’t have that kind of time to wait. If you or a client has a life insurance policy you no longer need, consider selling it in a life settlement. Use our qualification calculator to see if you qualify.
I would be happy to answer any questions you might have about this, or any other life settlement topic. I can be reached at 888-849-0887 or firstname.lastname@example.org.