Can insurance protect your retirement assets? YES…

Did you knowMany people feel uneasy about their projections for a secure retirement during economic uncertainty and the looming future of Social Security. In its 2013 Retirement Confidence Study, the Employee Benefit Research Institute (ERBI) learned that 57% of workers in the United States have less than $25,000 in savings and investments (excluding home values). Are you confident in your retirement security and your nest egg? Do you understand how vulnerable your retirement assets are to the perils of life?

Serious illness, premature death, job loss, and other financial constraints can sneak up on you at any time. These risks can carry serious setbacks to your retirement savings or drain your assets in ways that make it difficult to recover.

Group life at the workplace. 

Retirement savings will be exposed in two important ways if you die prematurely. First, your family members may need to liquidate or take loans from your account to supplement the loss of income. The second exposure is the loss of future contributions, which may be a significant amount.

Group life insurance can be an inexpensive but a powerful safeguard against these two risks. Life insurance proceeds are a tax-advantaged lump sum of money to the beneficiary. The death benefit can help ease short-term financial stresses and keep your 401(k) or IRA intact. Most of the time this amount of coverage is not enough, although it does provide a base amount of insurance.

The power of voluntary benefits.

Premature death is just one of the perils that might put your retirement savings at risk. Serious illnesses or accidents can create significant expenses for you, even if you have a good medical insurance plan. Unfortunately many families do not have the cash flow to pay out-of-pocket medical expenses or to wait out the elimination period before their disability policy goes into effect. In a situation like this you may be under pressure to take out a 401(k) loan, which will only diminish your account balance.

To safeguard against this risk, you may be able to purchase accident/critical illness, hospital indemnity, or disability coverage through your employer at an affordable price. Payouts can be used for anything, not just medical expenses.

Cash value life insurance = Supplemental retirement funds

Individual life insurance not only protects but can also supplement your retirement savings with increased flexibility. For a moment, let’s commingle the two buckets. When most people think of life insurance they think of the death benefit. Yet, not many people know the value of life insurance in protecting retirement savings or building wealth.

While employer-sponsored retirement plans such as 401(k)s and IRAs are the primary vehicle for retirement savings, many employees may have made the maximum annual contributions. Through a cash value life insurance policy, you can build cash value that may provide financial flexibility in retirement with the combined desire of a death benefit.

Lifetime retirement income?  Keep your retirement on track.

Some people believe that by the time you reach retirement age that the need for insurance has come to an end. This is often not the case. At retirement, most people make withdrawals from their retirement accounts to give them income, but how long will that income stream last? Will it last you an entire lifetime?

To offset this risk, the insurance industry has what is called fixed annuities. This type of contract is specifically designed to provide guaranteed income based on the interest rate environment. This insurance contract protects your lifestyle and eases the concerns of market volatility.

SMA Services, Inc. can help.

SMA Services, Inc. offers group life, voluntary benefits, individual life, and annuities — these are well-known protection strategies within the financial services industry. As an integral part of the SMAS team, I am here to help educate you on these strategies as a means to protect retirement savings and momentum.

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