Reaching the “Retirement Dream” -By Gary Burden-

Just exactly what is the “retirement dream,” and how does one achieve it in today’s society?  According to the “2016 U.S. Census Bureau, Saperston Companies, Bankrate” 18 years is the average length of time in retirement.  The average savings for a 50-year-old is only $42,797.  The average net worth of a 55-64-year-old is $45,477.  38% of the working public have saved nothing towards retirement.  These are startling statistics.  We all know that to achieve the “retirement dream,” it’s going to take money.  If everyone “knows” this, then why aren’t we doing something about it? 

I think that the primary reason for financial problems in our lives today is lack of self-discipline, self-mastery and self-control.  You might have noticed the emphasis on the work “self.”  I understand that many people find themselves in financial straits for no reason of their own.  But, these are not the families I am referring to.  There are those who will experience disabilities, deaths and loss of employment opportunities.  But our statistics show us that this problem goes way beyond the exception.  A majority of people are struggling with saving and planning for the future.  We have become a society that focuses more on the immediate and less on the future.  We have a tendency to spend everything we earn and a little more on top of it.  Credit Cards and debt in general continues to increase.  There is no need to delay gratification, because you can obtain what you want immediately without delay.

We have programmed ourselves to think that spending brings happiness.  We must reprogram our thinking to see the value of saving and financial control.  The larger the savings, the more control one has of their life.  The more debt, the more enslaved.

Some of you may be Financial Planners.  You have the opportunity to educate and work with people and their money.  But, the strong majority of people will never go to a Financial Planner for advice.  As agents, you may work with Annuities, Life Insurance Products or Retirement Plans.  Opportunities may come up to encourage saving and preparation for the future.  Understanding retirement plans that are available to your clients or can be set up by them gives you the opportunity to help them prepare for the “retirement dream.”  According to the “Investment Company Institute, American Views on Defined Contribution Plan Saving, 2015,” 90% of those with deferred comp plans agree that they help them save.  Of course, that is probably not surprising.  But, I find it interesting that 62% of those without, agreed.  And, 48% state that they probably would not save for retirement without an account.

-Gary Burden-

 

How Are Our Ethics Like the Appalachian Trail? -By Gary Burden-

Last year some of the younger men in the family thought it would be a grand adventure to take a three-day hike on the Appalachian Trail.  Now understand, as a rule, I don’t walk, run or have a regular exercise program.  But, I have three kids and I have been to Disney World.  What could be harder than packing three kids around on hot pavement for two days in a row?  Of course, that was probably 20 years ago.  But, at 58, I think I do fairly well for myself.

There were two different approaches that I could take, when preparing for this trip: First, be positive and assume that all will work out fine.  Second, consider the reality of the adventure and prepare.  I chose the second option.  After researching the trip, I found it rated “moderate” with an elevation change or 6,211 feet (Roan Mountain).  Prior to the trip, I started walking several miles at a time.  But, to prepare for the elevation change I decided to climb stairs.  Up and down the stairs in my home every morning up to 50 flights a day.  When the trip finally came, everything went well. 

As I look back on the trip, I remember all the views and good times.  I tend to forget some of the difficult climbs.  I don’t think about the freeze-dried meals that had no taste or texture to them.  I forget how hard the nights were, sleeping on the hard ground with no pillow for my head.  I dwell on the good experiences.  The views, the challenge and the fellowship that we enjoyed.

Ann E Tenbrunsel, Kristina A Diekmann, Kimberly a Wade-Benzoni and Max H Bazerman submitted a paper called, “The Ethical Mirage: A Temporal Explanation as to Why We Aren’t as Ethical as We Think We Are” to Harvard Business School.  In it they explain the three phases of an ethical situation.  The prediction phase, the action phase and the recollection phase.  When trying to make good decisions in our life, whether business or personal, are we being realistic about the situation?  Have we properly prepared ourselves for ethical challenges or do we just assume that we will work through them when they occur?  If we are realistic about our weaknesses we can prepare ourselves for the challenges ahead.  Preparation helps us get through the difficult choices.  After going through a challenging decision or experience, are we honest about the difficulties or do we choose to live in a glass bubble where all is perfect.  Learning from one’s challenges and failures is how we grow and mature.

Ethics is defined as an action or a response.  To make good choices we must first be honest with ourselves.  Everyone wants to believe that they are better than what we see around us.  But, we all make mistakes and just like my trip, we must choose to prepare ourselves. We prepare ourselves by avoiding situations that may tempt us, fortifying our values and taking the high road.  When you look back on your actions, be honest with yourself and choose to learn from your experiences.

And by the way, if you ever get the chance to hike the Appalachian Trail, I would highly recommend the Roan Mountain section.

-Gary Burden-

F5 Tornado, Are You Ready? -By Gary Burden-

Imagine a mile-wide tornado coming through your area.  It wipes out many of your clients.  They are homeless and desperate.  Of course, one of the first people they contact is their agent.  But, what if you have also experienced a loss as a result of the storm.  Your home has been destroyed, but it isn’t just a personal loss.  Your office and your employees have suffered catastrophic losses also.  Will you be ready to do business?  This is the situation many agents found themselves in when hurricane Sandy struck the east coast.  Insurance is all about protecting people from the catastrophic and devastating losses that can occur at any time.  But, have we properly prepared ourselves and our business so that we can be there for our clients when they need us the most.  This is the premise one of our newest classes, “Catastrophic Events.”

In April of 1974 148 tornados (seven F5’s and 23 F4’s) struck the Midwest.  They covered a combined path of over 2,600 miles.  There were 74 fatalities in Indiana alone.  The F’5 that hit Indiana was reported to be one mile wide and stayed on the ground for 62 miles.  Fortunately, it hit an area that was not as highly occupied as it could have been.

This raises two questions. First, are your clients adequately protected?  Do they have appropriate limits?  Do your commercial clients have adequate business interruption coverage?  Half of businesses that experience a serious loss never reopen.  The second question it raises is are you adequately prepared individually and as a business?  Regardless of your personal situation, your clients are going to need your assistance in this emergency.  Do you have an emergency plan in place that covers you, your business and the employees of your business? 

The Insurance Institute for Business & Home Safety (https://disastersafety.org) provides information for setting up an emergency plan.  This plan can be used by your clients and by yourself.  It is titled OFB-EZ (Open for Business).  When putting together the Catastrophic Events class, I found this to be useful information that I would recommend to any business out there, including those in our own industry.  How can we help our clients, if we can’t help ourselves?   

-Gary Burden-

The Future Market for Long Term Care -By Gary Burden-

According to every survey that I have seen on reasons for buying LTC insurance, the number one reason listed is to protect the assets.  But, should this be number one?  Many agents have convinced themselves that LTC is all about protecting the money.  While protecting the assets are important, I would question whether it should be the most important.  I personally have experienced several LTC needs throughout my immediate family.  In each case the primary concern was not the finances but the loved one that was in need of care.  With the assistance of home health care and assisted living we were personally able to avoid a nursing home stay for my father in his final months.  By having LTC insurance, we could choose the nursing home that worked best for our family for my mother in law.  Whereas protecting assets should be a goal, I think what is more important is providing a plan that gives the family choices, control and assistance in the care that is most appropriate for the given situation.

If LTC is all about protecting assets, then Medicaid becomes a primary competitor.  But, Medicaid does not provide the care options that private pay can provide.  Facility options can be limited, HHC and assisted living may not be available.  A few years back while attending a meeting led by the Department of Insurance, the head of the Family and Social Services Administration who oversees Medicaid in Indiana told us that according to their studies, the estimate that around 33% of the people in the nursing homes on Medicaid could and should be cared for outside of the facilities.  Why would anyone want to put their health care in the hands of the Government if they had other choices available to them.

According to new research by the Urban Institute, Rich Johnson states that about 40% for the older adults have a household wealth between $100,000 and $499,999.  Only 12% of older adults have assets exceeding $1 million dollars.  If the LTC product is all about protecting wealth, then the market is limited to the financial planners.  But, if it is about care, choices and control then this product is of great value to the most common seniors in our society.  If I can offer a plan that could help you and your family avoid a nursing facility and give you more options for care; if I can offer a plan that will assist the caregivers and relieve them of stress and anxiety; then I have something of value to offer to that client.

According to new studies, Genworth tells us that 70% of their claims begin outside the nursing home.  90% of their claims are under $150,000.  Boston College now tells us that the average stay in the nursing home for a man is down to 11 months and 17 months for a woman. 

A 2-year plan would provide coverage for the majority of stays.  It would open doors for alternative more desirable care.  It could help keep family members from going or delay stays in a nursing home.  It would provide relief for those families that will take on the responsibility of caregiving.  It can do all this at a price that would be more affordable for the average older adult.

-Gary Burden-