With Americans living longer, the country is facing a situation where nearly half (48 percent) of those ages 45-70 have no financial plans in place to protect themselves against outliving their assets and the rising care of healthcare according to a new survey from the Society of Actuaries (SOA).

Additional findings show more than one-third are worried about running out of money during retirement, but only 20 percent plan to purchase an annuity or other form of guaranteed lifetime income to protect their assets.

“It’s apparent that Americans, specifically the baby boomer generation – many of whom will be eligible for retirement the beginning of the new year – have not saved enough money for retirement,” says Anna Rappaport, FSA, MAAA and president of Anna Rappaport Consulting. “With the challenges in the housing and financial markets over the past few years, coupled with the fact that people are living longer, many baby boomers are finding themselves unprepared to maintain their lifestyle in retirement. As actuaries, we cannot stress enough the importance of having a plan in place that addresses all of the risks individuals may face in retirement, such as spending available assets too soon, meeting financial care needs, paying for the rising cost of healthcare and adjusting financially and otherwise to the loss of a spouse.”

Americans are continuing to rely on Social Security more heavily, with nearly three quarters (71 percent) of respondents saying they plan to claim it before the age of 70. Actuaries like Anna Rappaport emphasize the importance of claiming Social Security as late in life as possible to help secure more guaranteed lifetime income in retirement and help hedge against the risk of outliving assets.

Looking at other actions Americans take to protect themselves and hedge against potential future risks, the SOA survey found that 75 percent of Americans ages 45-70 protect their tangible assets, such as housing, through home or renter’s insurance; however, only 19 percent plan to insure the extra costs of disability and well-being by purchasing long-term care insurance.

“While long-term care insurance may be a complex and somewhat costly product, it can act as a financial safety net should people need extensive care in their old age,” says Dawn Helwig, FSA, MAAA and consulting actuary for Milliman, Inc. “Purchasing a long-term care policy or combination product can help mitigate the potential risk of having to pay out-of-pocket for unexpected health-related costs down the road.”

The SOA’s survey findings were based upon a nationally representative online survey of 1,006 individuals, ages 45-70, and had an error rate of plus or minus 3.10 percentage points.

What if one day you got sick or injured and couldn’t work?  How long could you go without a paycheck?  Where would you go for help?

If you get hurt or sick and can’t earn your regular paycheck, disability income insurance can pay you a monthly benefit amount.  With it, you can make ends meet until you’re back at work.

We recommend to our clients that they should consider the following options to put their tax refund to work for them:

• Set up an emergency savings fund. Simply essential. The old conventional wisdom advised saving enough money to cover three to six months of unemployment. Many financial professionals now recommend keeping enough money stashed away to cover six months to one year of unemployment.

• Buy life insurance. Many people have only the life insurance plans offered by their employer. But your family needs protection whether you’re working or between jobs. There are two basic types of life insurance: term and permanent.  A financial professional can help you determine the type and amount of protection you may need.

Enjoy life knowing that you’re protected from the unexpected!

Flooding is always a major concern; especially in the spring. This is the time to reach out to your insurance agent and talk to them about your risks and why it is important to purchase flood insurance to protect your home.  Even if your home is not on Geist or Morse Reservoir, you can still have standing water that could flood your basement. 

Last Spring I had a client with a full-finished basement who lived on 3 acres in Noblesville file a claim to help take care of the restoration when the ground around him was so saturated that the water had no where else to go.  The water was 3 feet deep throughout his basement because the sump pump couldn’t keep up.

Keep in mind that it takes 30 days after purchase for a flood policy to take effect, so it’s important that homeowners buy flood insurance before the floodwaters start to rise.