The coronavirus pandemic is impacting every corner of American life and most sectors of the economy. For the life insurance industry, the pandemic presents a two-sided threat. In many cases the fallout is being passed onto potential life insurance buyers.
 
The risks for life insurance companies are twofold. On one hand, the epidemic presents heightened mortality risk for insurers, especially among older policyholders and those with existing medical conditions.
 
On the other hand, the financial fallout from the pandemic has driven many people to a more stable asset, which has pushed the yields for 10-year treasuries down to less than 1%. That’s problematic for life insurance companies because they traditionally invest 70% of their assets in long-term bonds and treasuries.1
 
With life insurers facing lower returns and greater risk, they’re changing their offerings. Penn Mutual Life Insurance has stopped selling policies to those 70 and older and those in poor health. Prudential has raised premiums and halted sales of 30-year term policies. Other insurers are limiting their sales of certain types of policies, particularly universal life policies that have guaranteed* death benefits and interest rates.1
 
If you have a need for life insurance or estate planning protection, what are your options? Below are a few steps to consider:

Review your estate planning documents. 

If you can’t get the life insurance policy you need right now, it’s even more important that your estate planning strategy is appropriate for your needs. A will can help you direct assets to the right beneficiaries after your passing. More advanced tools, like a trust, can reduce taxes, probate costs, and other expenses so you can maximize your legacy for your loved ones. A financial professional can help you develop your legacy strategy.

Review your beneficiary-designated assets. 

Life insurance isn’t the only asset that you can pass to beneficiaries. Your 401(k), IRA, annuities, and other qualified accounts all have beneficiary designations. Of course, those designations have to be correct for the assets to go to the correct person.
 
Now is a good time to review those designations and make sure they’re up to date. It’s common for people to forget to remove a former spouse or forget to add a new child to a beneficiary account. If you pass away, it may be too late to correct the mistake after you’re gone.
 
This also may be a good time to find ways to maximize these accounts. For example, if you have a traditional IRA, you may want to consider a conversion to a Roth. This strategy isn’t right for everyone, but it could potentially help you pass on those Roth assets to your beneficiaries tax-free, maximizing your legacy.

Work with a professional. 

Life insurance companies may be tightening their rules and guidelines, but policies are still available. A financial professional can analyze options from a variety of carriers to find the policy that is best for your needs and your budget. They can also help you determine exactly how much coverage and what kind of policy is right for you.
 
Ready to implement a strategy for your legacy needs? Let’s talk about it. Contact us today at Florida Retirement Solutions. We can help you analyze your goals and develop a plan. Let’s connect soon and start the conversation.
 
1https://www.wsj.com/articles/some-americans-are-being-turned-away-trying-to-buy-life-insurance-11589103002
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. 20096 - 2020/5/19

How many sources of income do you plan to have in retirement? If you’re like most Americans, you’ll have income from Social Security. You also may have retirement savings like an IRA or 401(k) that can generate income. What other sources will you have available? How many should you have?

According to a new study from the National Institute on Retirement Security (NIRS), the magic number is three. The study found that retirees who have a combination of three income sources - Social Security, personal savings, and a defined benefit pension - are least likely to be in poverty in retirement. Less than 10% of retirees with all three income sources were in poverty or near poverty.1
 
Poverty is more common among those retirees who have fewer than three sources of income. Among retirees who have only savings and Social Security, but no defined benefit pension, more than 20% are either in poverty or near poverty.1
 
Nearly 40% of retirees rely solely on Social Security for income. Among that group, more than half are either in poverty or near poverty.1
 
Of course, a defined benefit pension isn’t a common benefit these days. Only 16% of Fortune 500 companies offer one.2 It’s also possible that you haven’t saved as much as you would have liked by this stage of your career. If you’re lacking a defined benefit pension or personal savings, how do you replace those streams of income?
 
Use catch-up contributions to boost your savings. 

Are you quickly approaching retirement and feel like you’re behind on your savings? The good news is there is still time to save money and create income for yourself in retirement. If you are age 50 or older, you can contribute up to $19,500 to your 401(k) in 2020, plus an additional $6,500 in catch-up contributions, for a total allowable contribution of $26,000.3
 
You can also contribute up to $6,000 to an IRA, plus an additional $1,000 in catch-up contributions if you’re 50 or older.3 Look for ways to trim your budget and increase your contributions ahead of retirement.
 
Change your plans. 

Another option to boost your retirement income is to adjust your retirement plan. For example, by working a few years longer, you can give yourself more opportunity to save. You also may be able to delay your filing for Social Security, which could increase that source of income.
 
You could also work part-time in retirement. While that may not be ideal, part-time or seasonal work could provide a much-needed income stream to supplement Social Security or savings.

Guarantee your income. 

You may not have access to a defined benefit pension, but that doesn’t mean you can’t have guaranteed* lifetime income. You can use financial vehicles like annuities to generate income that is guaranteed* for life, regardless of how long you live or how the financial markets perform. That stable income can act much like a pension.
 
Ready to plan your retirement income? Let’s talk about it. Contact us today at Florida Retirement Solutions. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.
 
 
1https://www.cnbc.com/2020/01/31/americans-shouldnt-rely-on-one-source-of-retirement-incomehow-many-actually-do.html
2https://www.planadviser.com/mere-16-fortune-500-companies-offer-db-plan/
3https://www.irs.gov/newsroom/401k-contribution-limit-increases-to-19500-for-2020-catch-up-limit-rises-to-6500
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. 20090 - 2020/5/18

The economic fallout from the coronavirus pandemic continues, even as states start to reopen restaurants, retail stores, and other businesses. The crisis brought an end to the bull market that started in 2009 and threatens to usher in a recession.1
 
What does the future hold for the stock market and the economy? When will the economy recover? And how will this crisis impact your retirement and your financial future?
 
It’s impossible to definitively answer those questions. In many ways, this event is unprecedented. We don’t know how long the virus will present a threat, so it’s impossible to predict how or when the economy may recover.
 
However, it is possible to make adjustments to your strategy to minimize risk and take advantage of potential opportunities. It’s also helpful to keep in mind the long-term nature of the economy and the financial markets. Nothing lasts forever, including recessions and bear markets.

Stock Market Performance 

The financial markets have been a rollercoaster since the onset of the pandemic. On February 19, the S&P 500 closed at 3386. On March 23, it closed at 2237, a drop of 33.93%. Since that time, the market S&P has climbed to 2863 as of May 15.2
 
It’s important to remember that the stock market isn’t the same as the economy. A drop in the stock market doesn’t necessarily signal a recession, just like a rise doesn’t necessarily spell an economic recovery.
 
It’s also helpful to remember that bear markets are a natural part of investing. They aren’t always caused by global pandemics, but they do happen. There have been 16 bear markets since 1926. On average, they last 22 months and are followed by a 47% gain in the year following the market’s lowpoint.3 We can’t predict when the market will hit its low point, or if it already has, but if history is any guide, the market will recover at some point.

Economic News 

While the stock market has bounced back somewhat since its March decline, the overall economic news continues to be negative. More than 36 million people have filed for unemployment since late March. In 11 states, more than a quarter of the workforce is unemployed.4
 
In the first quarter, the economy contracted for the first time since the 2008 financial crisis. GDP declined by an annualized rate of 4.8%. That’s not as steep as the GDP decline of 8.4% annualized decline in 2008. However, it’s possible the economy could face a greater decline in the second quarter. Consumer spending, which accounts for 70% of GDP, fell by an annualized rate of 7.6% in the first quarter. That’s the steepest drop for that metric since 1980.5
 
While states may be starting the reopen process, there is still significant uncertainty surrounding the crisis and the economy’s future. The good news is you can take action to minimize risk. Contact us today at Florida Retirement Solutions. We can help you analyze your goals and needs and implement a strategy. Let’s connect today and start the conversation.
 
1https://www.cnn.com/2020/03/11/investing/bear-market-stocks-recession/index.html
2https://www.google.com/search?safe=off&tbm=fin&sxsrf=ALeKk01UjyvpIcf62vDAgyulZ3dZuL1GWg:1589832165005&q=INDEXSP:+.INX&stick=H4sIAAAAAAAAAONgecRowi3w8sc9YSntSWtOXmNU5eIKzsgvd80rySypFBLnYoOyeKW4uTj1c_UNDM0qi4t5FrHyevq5uEYEB1gp6Hn6RQAAItD1MEkAAAA&sa=X&ved=2ahUKEwikycWrmr7pAhWWU80KHfhUBrcQlq4CMAB6BAgBEAE&biw=1536&bih=754&dpr=1.25#scso=_JerCXv0o9o70_A-NwLLYBg1:0
3https://www.fidelity.com/viewpoints/market-and-economic-insights/bear-markets-the-business-cycle-explained
4https://www.nytimes.com/2020/05/14/business/economy/coronavirus-unemployment-claims.html
5https://www.npr.org/sections/coronavirus-live-updates/2020/04/29/847468328/tip-of-the-iceberg-economy-likely-shrank-but-worst-to-come
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 20093 - 2020/5/19