Life Insurance Awareness Month

Life Insurance & the Path To Financial Security

New ACLI study reveals positive trends in Americans’ financial and retirement security
Nearly two-thirds of U.S. households are on the right track to financial security

by PE Kelley

Mr. Kelley is managing editor or this magazine. Connect with him by e-mail:

New research from the American Council of Life Insurers (ACLI) reveals a promising trend among consumers that indicates that more Americans possess a deeper understanding of the importance of a sound financial plan, and the role that life insurance plays in that plan.

The study shows that a much larger segment of the American public has embraced a future-view by ‘making balanced and informed financial decisions,’ In tandem with a comprehensive retirement income strategy.

According to a recent press-release from the ACLI, the study analyzes data from 4,500 U.S. households to provide a comprehensive picture of Americans’ current state of financial and retirement security. It finds that 65 percent of U.S. households are on track or nearly on track to be financially secure. Among households considered to be the most financially secure, 25 percent earn $50,000 or less. Among households that need significant financial improvement, 25 percent earn $72,000 or more.

Dispelling the Myth

“The study dispels the myth that income levels alone guarantee financial security,” said ACLI President and CEO Dirk Kempthorne. “Financial and retirement security can be within everyone’s reach so long as they have access to, and use, the right tools.”

The ACLI research looks at characteristics and common practices that contribute to a household’s financial security. It finds that most financially secure households:

  • Have a financial plan;
  • Accumulate savings;
  • Maintain an emergency fund;
  • Manage debt, and
  • Secure financial protection through life insurance, disability income insurance, long-term care insurance and annuities

A Path to Security

“The research shows a path that all Americans, regardless of income, can take to build financial and retirement security,” said Governor Kempthorne.

“Financial and retirement security also means protecting what you have built from life’s uncertainties. That is what life insurers do every day for 75 million American families. Whether it is protecting families’ financial futures following the death of a wage earner, protecting hard-earned savings from being depleted due to a disability or the high cost of long-term care, or protecting against the risks of outliving retirement savings, life insurers offer solutions that form the cornerstone of financial security.

Financial and retirement security can be within everyone's reach so long as they have access to, and use, the right tools

“We chose to release this study during Life Insurance Awareness Month to educate Americans on the steps they can take to improve their financial and retirement security and the key role life insurance products play in those plans. In fact, 80 percent of financially secure households own life insurance.”

Excerpts from the ACLI Study

Assessing Americans’ Financial and Retirement Security
, produced by the
American Council of Life Insurers (ACLI), offers a comprehensive definition and
assessment of households’ financial and retirement security. The analysis explores four generations at different stages of life to provide a high-level snapshot of Americans’ current state of financial and retirement security.

Studying the financial habits of different households provides valuable insight into how Americans rely on both public and private sector solutions to prepare for the future.

Policymakers and thought leaders in the retirement security space should consider
these findings when developing policy and consumer education efforts to help more
families achieve financial and retirement security. This will prove valuable in assessing
how new or current regulations, legislation, and external events may impact the
overall financial well-being of American households. The ACLI analysis encourages the
adoption of policies that make financial and retirement security solutions more easily
available and accessible to all populations. These recommendations will help maintain
the strength of private sector financial and retirement solutions and increase access
to helpful products that can lead to a more financially secure future for Americans.

America’s private sector, including life insurers, plays a key role in addressing the
challenges facing American families. Seventy-five million American families rely on
life insurers for financial security and peace of mind, now and in retirement. These
companies, including ACLI’s members, contribute proudly to the financial and
retirement security of Americans through a broad range of products and services
offered directly to individuals and through employer-sponsored plans, including life
insurance, disability income insurance, long-term care insurance, annuities, mutual
funds, qualified plan administration and record keeping.

Achieving financial and retirement security takes a conscious effort and educated
decision-making by individuals to plan, save adequately, take appropriate investment
risks, take financial precautions against the unexpected, and think ahead to
retirement. The private sector has created myriad ways to help families with all of
these decisions.

Data shows that while there is room for improvement, those who utilize private
sector solutions are better prepared financially for the future. The role of the private
sector will continue to increase in importance as individuals live longer and become
more responsible for savings that will provide their income during retirement.

When Congress enacted the Social Security Act of 1935, the age set for receiving
benefits was based on average life expectancy at the time. Advances in technology
and healthcare over the past 80 years have dramatically increased longevity. Every
day between now and the year 2030, 10,000 people will reach age 65. On average,
half of those who reach age 65 will live another 20 years.

The increase in life expectancy, along with the steady growth of the retirement-age
population, has placed a financial strain on Social Security, heightening the importance
of strong and sustainable private sector solutions. These factors have also limited the
ability of employers to offer sustainable defined benefit retirement plans, which are
linked directly to high retirement preparedness.

On an individual level, financial education and planning must keep pace to assure
continued quality of life. On a societal level, public policy should increase access
to financial guidance and solutions that aid with financial and retirement security
planning, whether on an individual basis or through the workplace. Collaboration
between policymakers and the private sector is key to increasing Americans’
overall financial security

Read the entire report here.




Visit throughout the month of September to learn how annuities and life, disability income and long-term care insurance can help Americans secure their financial futures. And see our infographic for more facts about the industry.