Having life insurance is considered a foundational part of a good financial plan, but many people believe that the need for life insurance diminishes as we age. This may be true under certain circumstances, but the changing lifestyles of people moving into retirement is creating a different dynamic where life insurance may be necessary later in life. Here are just a few of the reasons for this new paradigm.
Seniors are parents longer
What’s different about today’s seniors versus those thirty years ago? Plenty. For starters, parents are starting families later. According to the CDC, the average age of first-time mothers increased from 21 to 25 years between 1970 and 2006, with the largest portion of the increase being for births in the 1970s and 1980s. This statistic only pertains to first births, meaning those families with multiple children are having them well into their 30’s.
More kids go to school
According to the Bureau of Labor Statistics, 68.6 percent of 2008 high school graduates were enrolled in colleges or universities. With more kids going to college, and on average taking more than six years to graduate, the financial responsibility typically falls on the parents. With college cost rising twice the rate of inflation, around 5-8%, this represents a large financial burden for parents.
Adult children won’t move out
Just fewer than 60 percent of 22 to 24 year olds are living at home. For adult children ages 25 to 29, it’s around 30 percent. Also, young adults are waiting longer before getting married. Between 1970 and 2000 the average age at first marriage for women increased from 20.8 to 25.1; for men, it went from 23.2 to 26.8 years. This prolonged maturation process for children increases the financial burden on parents and adds to the need for continued financial protection.
Life Insurance can help
Life insurance for seniors can be a valuable and flexible tool for retirement planning. If you have significant financial obligations in retirement, consider life insurance as an effective planning option.
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