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There are three primary sources of income:
While none can provide for all of your retirement needs alone, each of
these sources is a valuable part of your retirement income.
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Government-Sponsered Programs
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The primary Government-Sponsored program - Social Security -
is a valuable source of retirement income...but it was never intended to
replace 100 percent of a person's income in retirement. Social Security
benefits are regressive:
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Social Security was never
intended to replace 100%
of your income .
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If you had Minimum Wage earnings throughout your life...your benefits would
equal about 59 percent of your earnings prior to retirement.
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If you had average earnings throughout your life...your benefits would equal
about 42 percent of your pre-retirement earnings.
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If your earnings were in the highest tax bracket throughout your life...your
benefits would equal about 24 percent of your pre-retirement earnings.
Receiving maximum Social Security benefits also involves a number of criteria,
including age, working credits, and current income.
The Solvency of Social Security
Lately, some have questioned the opportunity to receive Social Security
benefits at all. As the baby boomers enter retirement, there will be fewer
workers to support each retiree, and, with longer life spans, retirees will
need to be supported for a longer period of time than ever before in our
history.
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When Social Security was created in 1935, the official retirement age
was set at 65, and the average life expectancy was 77½ years*.
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Today, the average life expectancy is 82½ years*.
There are efforts underway to adjust the program to meet future demands. As a
result, Social Security will likely continue to play some role in our
retirement income for many years to come.
Regardless of such questions concerning the future of the
Social Security program, unless you plan to significantly reduce your standard
of living in retirement, Social Security will not provide for all of your
anticipated financial needs. That's why you need to supplement Social Security
with other forms of retirement income. See the Social Security site at
www.ssa.gov - 
for more information.
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Employer-Sponsered Programs
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Employer-sponsored programs, including profit-sharing, 401(k) and 403(b) plans,
can also be a valuable part of retirement income. More and more, however,
employers are shifting the responsibility for funding these programs to the
employees themselves. In addition, along with the many advantages they provide,
qualified employer-sponsored plans can present some disadvantages that many
employees overlook.
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There is no
"company store" security in employer-sponsored plans.
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Good News
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Bad News
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Employer funds retirement benefits...
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...but contributions may be contingent on current and future profitability.
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Money accumulates tax-free...
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...but employers and/or plan administrators often select investments, and
account balances may not be available for borrowing.
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Employees have a vested interest in the plan...
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...but their non-vested retirement account values may be forfeited if
employment terminates.
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Employee enjoys fixed retirement benefits...
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...but choices concerning survivor benefits may be limited and will be taxable
as ordinary income.
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Certainly, anyone who has the opportunity to participate in a qualified
employer-sponsored retirement plan should do so. However, just as there is no
"cradle-to-grave" welfare assurance in our government-sponsored programs, there
is no "company store" security in employer-sponsored plans.
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Individual Programs
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Individual programs, including IRAs and life insurance, are perhaps the most
critical for retirement planning in today's economic environment. With recent
changes in tax law, IRAs offer even more valuable tax benefits to help you meet
your retirement needs. Only permanent life insurance, however, provides
simultaneous protection against the two greatest financial risks -- dying too
soon or living too long.
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Only permanent life insurance provides simultaneous protection against
the two greatest financial risks.
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Dying Too Soon
The primary purpose of life insurance is to provide death
benefits free of federal income tax to your loved ones*.
With other plans, the amount your beneficiaries receive is dependent on
the amount of the contribution, time, and interest. Your loved ones could
receive significant benefits...
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...if you hold a retirement account for a significant length of time.
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...if you are able to make substantial contributions up to the annual limit.
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...if the investments in your account take off.
With life insurance, you don't have to worry about the ifs. With most
forms of life insurance, your beneficiaries receive a specified death benefit
whether you hold the policy for two, 10, or 30 years.
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Living Too Long
In addition to providing a guaranteed, immediate death benefit, permanent life
insurance contains a cash-value element that accumulates during the course of
the contract. This cash value grows tax-deferred (with no immediate taxes) and
can be used to supplement your retirement income through policy loans and
withdrawals*.
Policy loans and withdrawals will reduce the ultimate death benefit and cash value,
but when you reach the retirement stage of your life, you've typically finished
the process of raising a family, and your need for death benefit protection may
no longer be as great as it once was.
Guaranteed, immediate, income-tax-free death benefits and an accumulating cash
value...only permanent life insurance offers that certainty...
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...minus the requirements of government-sponsored programs,
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...minus the uncertainty of employer-sponsored plans,
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...minus the restrictions and regulations of Individual Retirement Accounts.
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Life insurance provides unique benefits that should be
a part of any retirement plan.
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