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What Are the 8 Most Common Sources of Retirement Income?

July 12, 2022

As you plan and prepare for retirement, it can be normal to feel a bit nervous about such a major life change. But the good news is that, according to a recent survey by the Employee Benefit Research Institute, 77% of retirees believe they will live comfortably. 


It might help to learn about the most common sources of retirement income cited by the respondents to this survey, so that you can identify opportunities available to you. 


Social Security. Most of us can count on drawing some amount of Social Security benefits, assuming that we meet minimum work history requirements. Of course, earning more and contributing more will one day result in larger monthly checks. But the average monthly benefit amounts to just over $1,500 for individuals and $2,600 for couples. 


Defined benefit (traditional) pension. Pension plans once made up a significant source of retirement income for American workers, but now only about a quarter of them have access to a pension plan. 


Defined contribution retirement plan (such as a 401k). Trends show defined contribution retirement plans, such as 401k accounts, replacing pensions as the primary vehicle of retirement planning within employee benefits packages. But of course, that means you’re responsible for making adequate contributions and managing the account over the years. Just 24 percent of survey respondents said that their 401k will be a significant source of retirement income. 


Individual Retirement Account (IRA). Even if you already utilize a 401k or other defined contribution plan, you can open an IRA. More than half of survey respondents say that they will draw income from an IRA in retirement. 


Personal savings or investments. No matter how well prepared you are, a personal savings account can provide much-needed cash during an emergency so that you aren’t forced to dip into retirement savings unexpectedly. You might also establish other investments that you can tap for income. 


Annuities. Annuities are technically insurance products that provide monthly income in exchange for a one-time lump sum upfront. However, their benefits and drawbacks can vary considerably, so working with a financial professional is essential to sorting through your annuity options. 


Work. After retirement, many retirees choose to go back to work part time, on a consulting basis, or as a self-employed worker. Aside from benefits like staying active and socially engaged, the paycheck from a post-retirement job can help to shore up income. 


Help from family. It might surprise you to learn that 37 percent of survey respondents expect to receive financial support from family in retirement. 


How do you feel after reading about these common sources of retirement income? If you’re looking to investigate your options or maximize the ones in which you already participate, give us a call. We can help you assess your situation and decide upon a retirement income plan that matches your future needs. 

Using Life Insurance to Protect Your Business: Key Strategies for Business Owners

February 11, 2025
As a business owner, safeguarding your enterprise against unforeseen events is crucial for long-term success. Life insurance offers several strategies to protect your business, ensure continuity, and provide financial stability during challenging times. Two primary methods are buy-sell agreements and key person insurance. Buy-Sell Agreements A buy-sell agreement is a legally binding contract that outlines the procedure for transferring ownership if an owner departs due to death, disability, or retirement. Funding this agreement with life insurance ensures a smooth transition and financial security for the remaining owners and the departing owner's beneficiaries. Types of Buy-Sell Agreements Cross-Purchase Agreement: Each owner purchases a life insurance policy on the other owners. Upon an owner's death, the surviving owners use the policy proceeds to buy the deceased owner's share. This method is often suitable for businesses with a few owners. Entity Purchase Agreement: The business itself owns life insurance policies on each owner. If an owner passes away, the business uses the proceeds to buy back the deceased owner's share, redistributing it among the remaining owners. This approach is typically preferred for businesses with multiple owners. Key Person Insurance Key person insurance is a policy that a business takes out on essential employees whose loss could significantly impact operations. The business owns the policy, pays the premiums, and is the beneficiary. If a key person dies or becomes disabled, the policy proceeds can be used to: Cover the costs of finding and training a replacement. Offset lost revenue resulting from the key person's absence. Reassure clients, creditors, and investors of the business's stability. This strategy is vital for businesses where certain individuals are integral to success, such as top executives, lead developers, or primary sales personnel. Additional Strategies Beyond buy-sell agreements and key person insurance, consider these life insurance strategies: Collateral Assignment: Use a life insurance policy as collateral for business loans. In the event of the owner's death, the lender is paid from the policy proceeds, preventing financial strain on the business. Executive Bonus Plans: Provide key employees with life insurance policies as part of their compensation package. This not only offers them personal financial protection but also serves as an incentive for retention. Deferred Compensation Plans: Promise to pay key employees a certain amount at retirement, funded through life insurance policies. This ensures the business can meet its obligations without affecting cash flow. Implementing life insurance strategies is essential for business owners aiming to protect their enterprises from unforeseen events. Work with us to explore your life insurance options and we can help your business remain resilient and continue to thrive.

What Happens If You Outlive Your Term Life Insurance?

February 1, 2025
Term life insurance provides coverage for a specified period, such as 10, 20, or 30 years. If you outlive your term policy, the coverage ends, and no death benefit is paid to your beneficiaries. As you approach the end of your term, it's essential to evaluate your current financial situation and consider options to maintain life insurance coverage if needed. Options to Consider Annual Renewable Term: Some term policies offer an option to renew annually after the initial term expires. While this allows you to extend coverage without a medical exam, premiums typically increase each year based on your age, making it a potentially costly option over time. PROGRESSIVE.COM Policy Conversion: Term-to-Permanent Conversion: Many term policies include a conversion feature, allowing you to convert your term policy into a permanent life insurance policy, such as whole or universal life, without undergoing a medical examination. This option can provide lifelong coverage and build cash value, but premiums will be higher than those of the original term policy. NEWYORKLIFE.COM Purchasing a New Policy New Term Policy: Applying for a new term life insurance policy can be an option, especially if you're still in good health. However, premiums will be higher due to increased age, and you may need to undergo a medical exam. Permanent Life Insurance: Alternatively, you might consider purchasing a permanent life insurance policy, which provides lifelong coverage and accumulates cash value. This option is generally more expensive but offers additional benefits. Exploring Alternative Coverage: Final Expense Insurance: Designed to cover end-of-life expenses, such as funeral costs and medical bills, final expense insurance offers a smaller death benefit with more affordable premiums and may not require a medical exam. Guaranteed Universal Life Insurance: This type of policy provides coverage for a specified age (e.g., up to age 90 or 100) with lower premiums compared to whole life insurance, focusing primarily on the death benefit without significant cash value accumulation. Take Action Now As your term life insurance policy nears its expiration, assess your current financial needs and health status to determine the most suitable course of action. Consulting with an insurance professional can help you navigate your options and select the best solution to ensure continued financial protection for your loved ones.
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