View All Blog Posts

How voluntary benefits can help secure retirement

It’s hard to set aside money for retirement when you’re caught up in managing day-to-day expenses. And with the median retirement savings only being 12 percent of what’s needed, it seems this is the case for many Americans.1 In fact, many Americans actually have no savings at all. 

While it would be easy to say that the first step is to create a savings plan, the reality of being able to do that while managing day-to-day expenses, for many, isn’t as easy as it sounds. And, while the struggle to save is a serious issue, the truth is that even with savings your retirement can be at risk. It’s important to be aware of some of the risks retirees may face, with or without the help of a healthy 401(k) and Medicare, and how voluntary benefits can counter those risks.
  • Medicare and out-of-pocket costs – People may see Medicare as their solution for healthcare in retirement. But, while Medicare is certainly an option, it still comes with out-of-pocket costs. Did you know the average out-of-pocket healthcare cost for someone on Medicare is $7,600?2 Voluntary benefits are an option to help curb these expenses and help protect your savings during retirement.
  • Additional expenses – There are other options to protect against the out-of-pocket costs with Medicare, such as individual health insurance and Medigap plans. But these will only help with the healthcare costs. It’s also important to consider other expenses, such as the possibility of regular hospital visits that include parking, travel, food or potentially at-home equipment that a retiree may need for recovery. Because voluntary benefits make lump-sum cash payments, they can be used to help cover these additional expenses.
  • The challenge of long-term care – As medicine improves and people continue to live longer, the likelihood that a retiree will need some form of long-term care will only increase. In fact, someone turning 65 today has almost a 70 percent chance of needing long-term care.3 The costs of a nursing home, in-home care or an assisted living facility can be massive and quickly chew through retirement funds. A voluntary long-term care policy or, even better, a hybrid policy offering life insurance and long-term care can serve as a perfect remedy. 
  • Portability and level premiums – The other key thing to keep in mind with voluntary benefits is that, in some cases, they are portable and they can also be issue-age rated. This means that you can buy a voluntary product through work when you are young and then keep that protection through retirement at the same rate you were paying when you purchased. Whereas some policies will increase in price with age or will be lost when retiring, voluntary can be a more dependable option if you have the right protection.
Many hope their retirement will be an opportunity to relax a bit more and enjoy life. But, if financial trouble is involved, that can be pretty hard to do. If you’re able to start saving, the next step is to protect those savings and portable voluntary protection with level premiums is a great way to start.

1 Most Americans close to retirement have saved only 12% of what they need. CNBC, 2018.
2 Here’s the average American’s Annual Medicare Bill. The Motley Fool. February, 2017.
3 “How Much Care Will You Need?”.

Posted on January 24, 2019 in Industry

Tagged as