Forced To Retire

Although we would like to think the decision when to retire is up to our individual preference, not everyone has control over when they will transition into their second act. There are forces at work that can impact the arrival date for better or worse. You may have to stick with a job longer than you hoped because you have not yet accumulated sufficient savings to meet the financial requirements of retirement. Instead of winding down a lifelong career and shifting gears to begin your new role doing what you want you may have to stay at the grind a while longer – sometimes a lot longer.

But at least you still have your job. With some extra effort and commitment you can hope to tough it out. There are others who would gladly continue in their current job role, challenging though it may be, but do not have the option. For various reasons they find themselves forced to retire before they would like, ahead of plan, and sometimes before they ready to make the move.

A reader of mine shared her fear of what the future holds when she was forced to retire at age 58 due to her inability to continue with the physical demands of her position. She had been at the same company for more than 30 years but was not ready to retire. She had hoped to put aside additional savings while she had a full time job so she could enjoy the retired life she envisioned. Forced to retire ahead of schedule she was unsure what to do next.

Older employees are often more costly to maintain than their younger counterparts. Health insurance rates for workers over 50 can seem burdensome to small companies. Many who have worked on the same job for decades have risen through the ranks or graduated into higher pay grades. Those higher salary requirements can be reduced by bringing in new people who start at the bottom. Though the skill level may not be there at first, younger employees have the additional attractiveness of likely being with the company for a longer period of time. Sometimes it just seems to make sense to go with someone younger.

Back in 2011 I joined a small start-up made up of twenty gung ho gonna-make-it-happen believers. Everyone was happy to work hard, always holding onto the dream of what could be. We were growing at a nice pace when a bigger company (8000 employees worth) purchased us. As is often the case with acquisitions various parts of our little start-up did not fit in with the corporate structure including my team. So at the age of 53 I found myself back on the streets looking for my next gig in a very difficult economy.

After six months of intense interviewing for numerous positions I came to the disheartening realization I was too old to do what I had been doing successfully for 30 years. Nothing had changed in my skill set – I was just getting older. At almost all of the companies I interviewed upper management was younger than me, many significantly younger. Apparently an “older guy” running a young aggressive sales team was not what they were looking for. I began to seriously wonder if I would ever find another job.

As more months crawled by reality began to sink in – my retirement days were effectively under way. All of our plans for the future included me working until 65 or at the very least 62. If I never worked full time again it would seriously impact our finances. But the writing was on the wall. Like many others shuffled out of the mainstream before their time I found myself among the ranks of the retired well before I planned.

Fortunately in that my wife was able to continue working until her retirement last year. Because of her efforts we had health insurance and were able to add to our savings for five more years. But it would have been nice to have included my contribution as well. And it would have been nice to be the one to decide when I retired. But what is nice is not always reality.

We are lucky. We should be able to get by based on savings and social security and living within our means. Not everyone is so fortunate. More and more workers nearing retirement find themselves out of a job at a time when they can ill afford it. According to Jamie Hopkins, associate director of the New York Life Center for Retirement Income, about 45 percent of people retire earlier than they planned. The best laid plans can dissolve into wishful thinking if you are not given time to sufficiently fund your fun. It is scary but it is a reality many planning to retire are forced to face.

 LoveBeingRetired.com

Life Settlements – A Powerful Retirement Tool

Written by Lingke Wang, Co-Founder of Ovid Corp. 

Life settlements are a powerful retirement tool many people don’t know about. It’s the sale of one’s life insurance policy to an investor – usually a large financial institution. Often times, seniors who have purchased life insurance before they were retired find themselves in situations where their policy is no longer serving their financial needs. In these types of situations, life settlements can be a great alternative to cancelling or surrendering the policy. Currently, over 80% of life insurance policies never result in a claim – meaning our dollars are just going towards the insurance companies’ profits.

Life settlements work like this: you receive an upfront cash payment in exchange for transferring ownership of your life insurance policy to a third party investor. The investor then continues to make the annual premium payments for the policy, and when the insured passes away, the investor collects the policy death benefit. The economics are similar to a life annuity – a common financial planning tool.

Life settlements were originally created in the 1980s to help seniors unlock the cash value of their life insurance. Every year, you pay premiums into a life insurance policy. But often times, circumstances will have changed since when you first purchased the policy – you may end up wishing that you no longer had this ongoing premium expense, or that you could get money out of the policy to pay for other expenses, like medical bills. This is where life settlements comes in – helping you monetize an asset that you didn’t know you had.

Learn more about how life settlements work.

When Should I Consider a Life Settlement?

Life settlements can meaningfully alter your household finances, but it isn’t for everyone. There are three general situations where you might consider a life settlement: (1) you can no longer afford your policy’s premiums (2) you need to free up cash – to finance a purchase or to pay for a large upcoming expense, or (3) you no longer need the life insurance coverage.

1. You can no longer afford your life insurance

In this scenario, most people would lapse their life insurance policy – stop paying the premiums and let the policy become void. Unfortunately, this option results in forfeiting all of the policy’s value and losing all of the previously paid premium payments. A life settlement can be a much better option in this scenario because it will help you recover some or all of the money that you’ve paid into the policy.

Premiums can be unaffordable for two reasons. Either your financial situation has changed and you can no longer afford premiums, or the premium cost has escalated as you’ve grown older – a common feature of universal life insurance policies.

2. You need to free up cash for another expenses

Need to pay for an upcoming medical expense? Want a new vacation home in Florida or to live abroad? Want to pay your grandson’s college tuition? Life is expensive – sometimes more expensive than we have anticipated. If you have an old life insurance policy, it could be used to fund something important to you.

3. Your life insurance coverage has outlived its use

Most of us purchase policies to protect our children in case of an unexpected passing. However, after many decades, many seniors find that their coverage is no longer necessary because their dependents are now financially independent. A life settlement can help turn this obsolete policy into cash value.

Life insurance can be complex – and there are often several options when you are presented with one of these life scenarios. If you have built up a large cash value in the policy, in addition to a life settlement, your other alternatives include borrowing against that cash value or surrendering the policy. Start by speaking with your financial advisor and/or your life insurance agent to be informed about all the options and features of your policy.

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Ovid Corp. is the leading life settlement exchange, where consumers can sell their life insurance policies through our auction platform to institutional investors. For more information about Ovid please visit www.ovidlife.com or call 800-311-OVID.