Why Life Insurance
|WHEN IT COMES TO RETIREMENT, MOST PEOPLE TRADITIONALLY RELIED ON THREE SOURCES OF INCOME.|
|1 - FEDERAL GOVERNMENT|
Due to the increasingly
difficult financial position of federal programs and
the challenges that employers face in establishing
and maintaining pension and profit sharing plans, it
is more and more important for you to depend on your
own personal savings efforts for retirement.
The retirement benefits offered under Social Security are also at risk because of:
Changing demographics: In the 1960s, there were five workers paying taxes for every person receiving benefits. Today, that ratio is nearly 3:1.
The law governing benefit amounts may change because, by 2037, the payroll taxes collected will only be enough to pay about 76 of scheduled benefits.
U.S. National Debt: A time bomb that is ticking:
• The federal budget deficit for 2009 is expected to exceed $1.8 billion.
• Federal debt, not including unfunded future liabilities, is over $11.3 trillion.
• Total federal debt, including the present value of future liabilities for programs like Social Security and Medicare, is over $59 trillion.
• Total federal debt as a percentage of gross domestic product is more than 240%. That is more than twice the ratio of debt: GDP our country had after World War II.
|2 -EMPLOYER PENSION AND PROFIT SHARING PLANS|
One or two generations
ago, it was common for an employee to have access to
a type of pension known as a defined benefit plan.
In 1978, there were 128,041 of those plans in the us. Today, there are less than 26,000 - and the numbers are getting fewer and fewer every year.
Source: Empoyee Benefit Research Insitiute http://www.aflcio.org/lissues/retirementsecutiry/definedbenefitpensions/
Today most empoyers offer what are known as defined contribution plans.
With the economic recession of2007 - 2009, defined contribution plans' values have been decimated.
Source: Employee Benefit Research Institute
Over $1 trillion dollars have been lost as result of market losses. Another $1 trillion dollars were lost as a result of employees having to change jobs.
Source: Huntingtonnews.net - Date 5/22/2009
"Losses from 401(k) Plans Make Bernie MadoffLook Like a Piker"
Defined benefit plan: Those plans paid retiring employees a fixed amount of money every year, often a percentage of salary based on years of employment, for life.
Defined contribution plan: In these plans, an employer won't promise you a particular income at retirement. Instead, they will place money into an account and give you the choice in how to invest it. A common example of this type of plan is a 401(k) plan.
|2 -PERSONAL SAVING|
A large portion of your retirement depends on your ability to save.
Lifetime earnings up to age 65 if your income averages ...