Health Care Costs Continue Rising for Retirees

Retirement can be expensive, and with people living longer than ever, the costs keep going up. As the price of retirement increases, people need to adjust their retirement planning accordingly. No matter how much you’ve already saved, maintaining your current standard of living will require a concerted effort. Ideally, retirement planning should allow consumers to retain 80 percent of their preretirement income after they leave the workforce.

For many consumers, that will seem like an unattainable goal, particularly if they want to leave some amount of money to their children or other beneficiaries. Financial professionals need to articulate the expenses that will occur in retirement and demonstrate why life insurance is an ideal solution to counteract these costs.

The rising cost of retirement

Many expenses crop up during retirement, but health care costs are often the most onerous. According to a recent Fidelity Investments study, two people retiring today will end up spending an average of $245,000 on health care throughout their retirement. That represents an 11 percent increase from last year and a whopping 29 percent increase from a decade ago.

Rising health care costs are the No. 1 concern for the majority of pre-retirees, but that doesn’t mean they’re considering it as they plan their retirement. In fact, just 22 percent of respondents indicated they had taken health care costs into account when crafting their financial plan.

How life insurance can help

Financial professionals should address consumers’ fears about rising health care costs directly and provide surefire solutions through insurance products. One of the best ways to highlight life insurance’s benefits as part of a personal retirement plan is to focus on the tax advantages offered by these policies.

With life insurance for retirement, clients don’t have to deal with contribution limits, cash value growth is tax deferred, and the distributions are tax preferred. That’s ideal for retirement savings, and with a life insurance policy, surviving beneficiaries can receive an income tax-free death benefit.

Additionally, while other retirement planning options reward starting early in life, it’s possible to add a life insurance policy to your plan later on and still reap the benefits. If consumers are particularly concerned about health care costs, producers can suggest annuities that will provide steady retirement income for several years, or life policies with long term care riders. These options are great ways to assuage consumer fears, but many clients remain unaware of how life insurance can boost their financial situation in retirement.

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