May 6, 2019
Why Most Americans Make Early Withdrawals From Their Retirement Savings
A recent study published by GoBankingRates surveyed 2,000 Americans who indicated they had made an early withdrawal from their retirement funds, and while the results are fascinating not all of it is surprising. The study found that nearly 44% made deductions to pay off debt and bills, 22% to pay for medical expenses and healthcare, 22% to cover a financial emergency, and 12% to pay for education or purchase a home.
Unfortunately, this breakdown isn’t too surprising given that US consumer debt is at a record high of $4 trillion, and healthcare in the US costs twice what other developed nations pay. But of the 22% of Americans who tap their retirement savings to pay for medical expenses and healthcare, nearly half are 55 years old or older. This trend is worrying given that these individuals are tapping much needed retirement savings right before they will need those same funds to retire. And long term care costs are steadily on the rise.
This confluence of downward financial pressure on aging Americans leads to the very high lapse rate of life insurance policies. After all, the kids are now grown with families of their own and there are bills to pay. In some estimations, upwards of 80% of life insurance policies are lapsed! Most seniors do not know that there is another option for their life insurance policy, though. A life settlement is a powerful option for a policy holder who no longer needs or wants the coverage, and especially if they have debt or medical costs to cover.
A life settlement is the sale of a life insurance policy to a third party for more than the surrender value, but less than the death benefit. So instead of giving the policy back to the insurance company (which they would love) you can ask an investor what your policy is worth to them. That is very much over-simplified, it is highly recommended to discuss your case with a life settlement broker or provider who is licensed in your state. They have the experience and expertise to guide you to the highest valuation for your policy.
Q Life Settlements is here to answer your questions regarding life settlements in general, or to discuss the specifics of your unique case. Is a broker better for your policy, or a provider, what is a realistic valuation? Give us a call or fill out the form below and one of our life settlement experts will gladly help!
Author: Steven Shapiro
Steven Shapiro is the founder of the Company and also the President and CEO of Q Capital Strategies, LLC and Life Settlement Solutions LLC. Steven has been active in the life settlement industry for the last 18 years. In addition to his life settlement experience, Steven has expertise in strategic consulting, investment banking advisory services, and private equity investing. Steven holds a B.A. degree in economics from the University of Pennsylvania and an M.B.A. in finance and entrepreneurial management from The Wharton School of the University of Pennsylvania. Steven is also the immediate past Chair of LISA (having previously served as Chair), the Life Insurance Settlement Association, the oldest and largest trade organization in the life settlement industry.