Life is not getting cheaper. The cost of everyday items continues to rise, and too often seniors already have stretched their dollars to the breaking point.
In October, the Social Security Administration announced a 1.6% cost-of-living adjustment for 2020, meaning the average retiree will get $24 more each month, or about $1,503. … Yep, that’s about 77 cents a day – not even the cost of a newspaper.
Cost-of-living adjustments (COLA) act much like interest rates on savings. Low COLAs mean Social Security benefits grow more slowly in retirement. This occurs even though many costs experienced by retirees – i.e. out-of-pocket spending on prescription drugs – may grow several times as fast.
The Senior Citizens League estimates Social Security benefits have lost 33 percent of buying power since 2000. Further, an SCL analysis found that over a 10-year period, average Social Security benefits of $1,075 per month in 2009 lost a total of $15,258 in financial growth from 2010 to 2019 when compared to the previous decade when COLAs averaged 3 percent.
So, with your money not producing as big a bang for the buck, are there options to help offset everyday living costs or even to boost a retirement nest egg to get more out of the golden years? Yes, and most likely it’s an option you have not considered: your life insurance policy.
“People need to start thinking outside of the box, as far as relying on the government or Medicaid or Medicare or private insurance to provide that safety net,” said Scott Page, CEO of LifeGuide Partners. “When you look at the amount of money the CEOs of health-care companies are taking home and the high-paid executives, they really are causing the problem, in my view, of what is happening in the country.
“Whether you’re struggling in retirement or a cancer diagnosis, it’s a shame, however, that bankruptcy should be a consideration for an end-play,” he added. “If you don’t have a stockpile of money, if you don’t have a great insurance policy, if you don’t have some way of paying off all of the debt … my strategy to them, which is a last-ditch effort, is to prepare for bankruptcy. That’s just a shame to have bankruptcy as a consideration to pay for your health-care costs in this country.”
Today, the average couple retiring at age 65 will spend an estimated $280,000 on health care during the remainder of their lives. And Medicare generally does not cover the cost of dental care, hearing aids, routine vision checks, or long-term care.
There also are real costs with Medicare. Part A provides coverage for hospital stays, skilled nursing, hospice and some home health services. As long as you have at least a 10-year work history, you pay nothing for Part A. However, it comes with a deductible of $1,340 per benefit period and has annual caps on benefits.
Part B coverage kicks in when you visit a doctor or receive other outpatient services, like a flu shot. It also covers medical equipment, like crutches or blood-sugar monitors.
This year, the monthly premium for Part B is $134 for people with an income up to $85,000. If you earn more than that, you’ll pay more. It also comes with a $183 deductible. After it’s met, you typically pay 20 percent of covered services.
Some low-income people qualify for programs that reduce their Medicare-related costs as well as help for prescription drug coverage. Some state-run savings programs also assist with copays, coinsurance, deductibles and premiums. For those who don’t qualify, however, paying out of pocket or buying additional insurance are their options.
This is where your life insurance policy could save the day – yes, before you die. As an asset, life insurance policies can be sold or divided. It is possible to sell a portion of your policy, which will give you the financial freedom you may need.
With expenses continuing to rise and the cost of living simply not keeping up with the here and now, it’s time to consider selling your life insurance policy. If the insurance is no longer needed, premiums are increasing and coverage too expensive, or the insurance was purchased for business purposes that are not needed anymore – you may be in position to alleviate potential financial hardship.
“I, personally, would feel better paying a little more in taxes knowing every human being in this country has health care and it is not going to bankrupt them than to save a few dollars in taxes,” Page said.
“Until the insurance lobby is stopped and these large dollars flowing into political campaigns can be stopped, we’re going to be wrestling with this for a while. What I’ve seen as a solution, to solve a financial crisis, is to look at their life insurance policy.
“Many people see their policy as a liability, something they pay into,” he added. “They bought it 10, 20 years ago for their children, if something were to happen, and now their children are grown, their life has changed. Now, there is an ability for them to convert that policy into immediate cash.”
LifeGuide Partners offers a free, no obligation policy appraisal. For more information, call 1-888-GUIDE50.