June 07, 2016

Missouri Insurance Director encourages Missouri families to prepare for retirement

Four in 10 baby boomers have nothing saved for retirement

Jefferson City, Mo - Increased longevity means having to save more for a financially healthy future but 40 percent of baby boomers have nothing saved.

Missouri Department of Insurance, Financial Institutions and Professional Registration (DIFP) Director John M. Huff spoke to the insured retirement industry this week about ways the industry and regulators can work together to advance retirement security during the Insured Retirement Institute (IRI) Government, Legal and Regulatory Conference 2016.

"With 69 percent of baby boomers having no defined benefit pension plan, many might find themselves in a position where they do not have enough saved for retirement," Huff said. "It is critical that individuals are educated about the financial resources and products available so that they can make thoughtful financial decisions about their future."

While Huff addressed the industry about the importance of building partnerships to help protect the future of Americans' retirement security, there are practical steps Missourians can take today to prepare.

No matter the life stage, everyone should think carefully about retirement preparedness. The department offers Missourians the following tips to help plan for a robust financial future.

  • If your workplace offers a 401(k), 403(b), ESOP, profit sharing plan, IRA or Roth IRA, you should consider taking advantage and start saving now if you haven't already. Many employers will match contributions up to a certain amount. The sooner you start a retirement savings account, the more money you'll have for retirement.
  • If you're over 50, you can increase the amount you're allowed to contribute to your retirement savings with catch-up contributions. The Internal Revenue Service allows increased contributions depending on plan type.
  • Review your specific needs for health insurance. A longer life means more medical care. Twenty percent of all retirement income is spent on health care, according to the United States Department of Labor. Understand what services your health insurance plan will cover and what it wont. You may want to purchase a Medigap policy or Medicare supplement to cover costs that Medicare doesn't. Out-of-pocket medical costs can eat away your savings without proper planning.
  • Although life insurance may seem like something only to consider at a later life stage, life insurance policies can provide benefits throughout life including whole life policies that build cash value. Whole life policies also allow you to borrow from them but doing so does reduce the amount your beneficiaries will receive. Do your research carefully to determine if such a policy is right for you at your current life stage.
  • Consider purchasing an annuity. An annuity is a contract (policy) between you as the policyholder and an insurance company. An annuity pays a periodic (monthly, quarterly, semiannual or annual) income benefit for the life of a person (known as the annuitant) or persons. Annuities can also be purchased for a specified time period. They can play an integral role in a financially secure and stable retirement. However annuities are not for everyone. There are different types of annuities. Research your options thoroughly prior to deciding to purchase one.

For more resources and information about retirement preparedness visit insurance.mo.gov/seniors or take a look at the NAIC's Retirement Planning Checklist.