Changing Retirement in America

The generation on the cusp of retirement has not seen wage gains for two decades


By Stephen E. Terrell

Mr. Terrell is Senior Vice President of Market Development and Branding for The Lifeline Program, a life settlement provider based in Atlanta, Ga. For more information, call 770-724-7300 or visit

The financial crises of the last several years has changed the economics of retirement at a particularly bad time. The oldest baby boomers recently turned 65 and became senior citizens. The number of senior citizens will more than double between now and 2050 and constitute a larger share of the population than ever before. Unfortunately, a retirement crisis appears inevitable.

This immense generation on the cusp of retirement has not seen wage gains for two decades, has compensated for stagnant wages by dramatically increasing debt and recently witnessed nest eggs like real estate assets and retirement accounts crash.

Unfortunately, one out of four baby boomers has put away little or no savings towards his or her retirement. Most boomers simply cannot afford to retire.

Working past traditional retirement age will be most likely be part of the solution, but boomers will also be forced to fashion alternative solutions to financing their retirement, such as a life settlement. The life insurance settlement industry has been preparing for a climb in life settlement transactions during the next two decades, due in large part to the imminent baby boomer retirement crisis.

Many Americans still don’t know a life settlement is an option when they no longer need or cannot afford life insurance. The 75-million-strong boomer demographic is the most insured generation of all time, yet more than 85 percent of life insurance policies never reach maturity.

This happens for a number of reasons. Life insurance premium payments often get thrown-in with other expenses that are left unpaid during household budget tightening. The most popular life insurance policy in America, term life insurance, usually expires before the policyholder reaches retirement age. Further, term policyholders often choose not to renew a policy due to changes in life circumstances such as children reaching an age of self-independence or other factors such as rising premium costs.

Policyholders can sell their life insurance policy for cash in a transaction called a life settlement, and a life settlement provider continues to pay the purchased policy premiums, collecting the full amount when the policy seller passes away. The value of a life settlement varies depending on the life expectancy of the policyholder at the time of sale, and on the written full value of the policy. A life settlement will always be less than the full value of the policy, but much more than the amount a policyholder would receive if he or she let the policy lapse or surrendered it to the insurance company. Often, a life settlement offers seven to eight times more funds than surrendering the policy.

Statistics prove boomers want to be informed if they are eligible for a life settlement, and one in four boomers would seriously consider selling an unneeded policy. We recently performed a nationwide baby boomer survey with research company ICR. Below are some of the results gleaned from that study:

  • 79 percent of boomers felt financial planners and insurance professionals should be informing policyholders about life settlements as a financial option
  • 29 percent would consider a life settlement to help fund retirement
  • 76 percent believe it is important for people older than 65 years to keep life insurance coverage in force


The earlier a policyholder starts thinking about a life settlement, the more attractive the option will be later in life. The Lifeline Program developed guidelines for agents on what they should recommend to clients at different ages referred to as the ’50/60/70 Plan.’ Smart decisions regarding a life insurance policy today equates to higher funds and increased likelihood of satisfaction with a settlement.

  • For clients in their 50s, make sure their life insurance coverage will last into their 70s. If a client has term life insurance, extend the term or purchase the least expensive convertible term policy available. Later, when the client is in their 70s, they can convert it to a permanent policy and perform a life settlement.
  • Policyholders in their 60s should review if the initial reasons to purchase the policies still exist. Spouse death or divorce often changes the need for protection or grown children lessen the need for insurance coverage. Whatever the case, they need to remain insured into their 70s. People this age in failing health may opt to appraise their insurance coverage immediately with a life settlement provider.
  • Once clients reach their 70s, contact a life settlement provider to verify if a client is a good match for a life settlement transaction.

A life settlement is a smart financial planning option for clients concerned about retirement costs. This transaction converts a former liability into an asset. A settlement also means an agent continues to receive an annual commission, in addition to commission on the life settlement.

The crippled economy will force a paradigm shift in the way Americans finance retirement, sparked by boomers exploring alternative resources to compensate for recession-related losses. Life insurance agents are in the best position to educate consumers about life settlements, starting with their clients. The life settlement industry is prepared for a sustained spike in consumer-triggered settlement inquiries.