A recent study from BlackRock showed retirees are positive about retirement and are using their golden years to do things they always wanted to do, but did not have to the time for in the past. Many retirees are using their savings or funds from life insurance policies to pay for these hobbies and adventures, so as to avoid financial hardship later in life.
The study identified gaps between perceptions of recently retired and current workers with regard to retirement planning and how to fund life after work. Due to the economic downturn, several traditional sources of secure income in retirement have declined, pushing many soon-to-be retirees to increase their use of alternative financial products for retirement activities including life insurance and annuities. Retirees recommend working with financial planners to help take advantage of all sources of income later in life, as well as understand the intended outcomes of retirement plans to boost confidence.
According to the study, 75 percent of expenses for today's retirees are covered by secure income sources, further boosting a sense of optimism in the population. While many current retirees are supporting themselves with pension funds, many soon-to-be retirees will not have access to pension funds and must find alternative sources of secure income in retirement. As a result, more consumers are replacing pensions with workplace retirement savings plans like 401(k)s and life insurance policies to fund retirement, boosting the well-being of retirees.
The study revealed 64 percent of retirees agree that their financial situation allows them to choose not to work, compared to 37 percent of workers who predict they will be in the same position when they are ready to retire. Further, 46 percent of retirees are purchasing things they want rather than just what they need, compared to 37 percent of workers; while 43 percent of retirees are easily covering their medical costs, compared to 28 percent of workers. About 51 percent of retirees and 25 percent of workers are confident they will have enough money to live comfortably in retirement, underscoring the need for alternative sources of income.
One source of income, life insurance, can be purchased from multiple providers. The Wall Street Journal reported employers can get life insurance plans at a group rate, which means lower premiums for employees. While some companies offer free coverage, others have employees pay full premiums. Typically, an employees can get a basic benefit for free and have the option to pay for additional coverage depending on their needs or retirement plans.
When obtaining a life insurance policy through an employer, employees often do not have to get a physical or blood test first. Therefore, consumers with existing conditions such as diabetes or heart disease should be able to acquire coverage without being exposed to increased premiums.