Insurance Quotes & Advice

Before the recent recession many a financial planner would have rolled their eyes if one of their clients had suggested buying a fixed annuity contract.  Even insurers themselves had to come up with variable annuities in order to compete with the growing popularity of mutual funds.

Fixed annuity contracts had fallen out of favor for years as a popular investment vehicle for many retirement plans but of course they grew much more popular as the effects of the recession became more pronounced.  However millions of Americans lost a big chunk of their retirement funds with the recent drop in the stock market.

There’s going to be a lot of people who are going to have to delay their retirement plans and hope that their pension funds recover somewhat.  Annuity buyers have fared reasonably well in contrast during the recession although they aren’t without risk either.

Insurers have been hard hit during the financial crisis, especially life insurers who are on the hook for the guaranteed pay outs of annuity contracts.  Insurers faces much more risk of insolvency these days than they have in decades, which would theoretically put those annuities at risk.

Also that big payday insurers were expecting with the pending retirement of the baby boomer generation kind of went out the window with the massive loss of wealth many people experienced.  That being said, purchasers of annuity contracts have to pleased with themselves as their investments have held their value while some other investment choices have lost nearly half their value.

Yes the returns can be minuscule but other than government and other highly rated bonds no other investment vehicle can match their safety and performance during the recent downturn.

The economic downturn has hurt many Americans and with equity markets falling more than 40% off of record highs, for many that translates into a comparable loss in principal in their retirement investments.  Those losses will force many Americans to put off retirement to make up for those losses.

The survey indicates that workers are paying down debt, cutting spending on restaurants and entertainment and planning to work past their planned retirement ages.

The survey completed in December shows that 54 percent of workers will delay retirement by at least a year because the economy has sapped their finances.  Nearly one-fourth said they will need to work more than five years.

The survey shows that as the economy worsened in the last half of 2008, many workers came to the conclusion that they would be forced to work past the traditional retirement age of 67 just to maintain their lifestyle and to keep health insurance.

Another worry is that corporate America has started cutting retirement benefits in an effort to cut costs.  We have already seen a number of companies announce that they are eliminating 401k matching.

Rising unemployment is another growing concern for many Americans, the economy lost an estimated 2.6 million jobs last year and it doesn’t look like the unemployment picture will improve anytime soon.  Those seeking employment may have to settle for a job that pays less than their previous position.

Some may also choose to retire on time and live at a lower lifestyle than what they were accustomed to.  The current recession could last for quite awhile and many Americans have difficult choices ahead.

Many Americans have had their retirement planning severely impacted due to the recent economic downturn.  Equity markets have lost over 40% off their record highs and it will take some time for that to recover but another looming problem for retirees on the horizon.

The record setting deficit this year and the ballooning national debt could come back to haunt seniors and other soon to be retired individuals.  When the economy does finally recover, somebody is going to have to pay up for the big bill the government is currently running up.

Unfortunately this will likely mean higher taxes sometime in the next few years.  Studies have shown that for many seniors, taxes are already their highest single expense, eclipsing healthcare costs by a large margin.

Tax considerations should be a major factor when planning for retirement and the likely changes will have a significant impact.  I think we are going to see a big growth in tax shelters as individuals try to reduce their tax liability.

Even those who don’t face retirement for sometime will have to rethink how they plan because we are seeing a lot of troubled companies eliminating 401k matching, which has been a staple for decades.  Since nothing has been done yet to address the future insolvency of Social Security, in some ways it may be even harder to plan for those who still have quite a few years until retirement.

Every ones situation is different and it is important for everyone to talk to your financial planner and discuss how higher taxes in the future could affect you.