Insurance Provides Economic Safety Nets

Think you’re going to have to work till you drop. You’re not alone. One in five American workers now believe they will never be able to retire. That’s among the bleak findings from an annual survey of 1,499 adults ages 18 to 66, representing the U.S. workforce and all income levels. Other highlights from Sun Life Financial’s Unretirement Index (SM):

• Only 23% of working Americans are confident that can meet basic living expenses in retirement – down from 42% in 2010.
• Only 9% have confidence in the future of Social Security (compared to 22% in 2008).
• In 2008, 20% of survey respondents were confident about receiving Medicare benefits. This year, the number hovers around 8%.

Sun Life, which has been conducting this survey since 2008, noted that this year’s responses saw a year-over-year erosion in confidence across all five of the index components. Confidence in:  employee benefits down 31.7%; the economy down 25%; government benefits down 21.6%; personal finances down 13.9% and personal health down 13.2%.

The only optimists in the survey were people who own long-term care insurance or annuities. They feel significantly more confident about their ability to enjoy retirement because of safety nets economics.

Annuity Basics

Annuities are intended to provide an annual benefit for life for one person, two or more people, or for a specified period of time. They are sold by insurance companies and designed so that the owner (annuitant) can never outlive the annuity income. By contrast, life insurance is designed primarily to provide a payout to a beneficiary when the policy owner dies. And unlike many life insurance policies, annuities do not require a medical exam. Annuities can be purchased in installments with the benefit scheduled to being at a certain age; or they can be purchased in a lump sum. Under certain circumstances, the contribution to an annuity can be a tax-deferred investment.

Long-Term Care Basics

In the event you are unable to perform at least two of five basic daily living activities, long-term care insurance provides for your in-home or nursing facility care for the specified period of time in the policy. There are a variety of long-term care policies on the market. The best offer guaranteed renewability, a limited waiting period before benefits are paid, an inflation guard that automatically adjusts benefits yearly, a premium waiver while you are receiving long-term care, premiums based on your age  at the time you applied for the policy and no limitations on pre-existing conditions.