The Silver Tsunami is Facing a Tidal Wave of Financial Challenges. So
What’s the Solution?

In our March blog article, we discussed how aging baby boomers (the “silver tsunami”) are struggling to avoid post-pandemic debt. We explained how selling an unwanted policy and using the cash proceeds to pay off debt has been an effective solution for many seniors.

Since that time, we’ve heard from a number of financial and insurance professionals that many of their senior clients are now concerned over what they consider to be a tidal wave of financial challenges.

As new data flows in detailing the state of our inflation-ravaged economy, financial professionals and their clients are becoming more proactive and preparing for rainy days ahead. Food prices are high, credit card interest rates are spiking, and retirement portfolio values have dipped.

With a possible recession on the horizon, some seniors feel as though they have gone from facing a few minor financial setbacks to dealing with an impending financial crisis.

Some are questioning whether they really need to maintain expensive life insurance policies and are reconsidering whether selling an unwanted life insurance policy is a sensible solution in today’s world.

What the Recent Data is Telling Us

Data released in early June 2022 by the Bureau of Labor Statistics showed the Consumer Price Index had jumped 8.6% in the 12-month period ending May 31, 2022 – the largest increase since December 1981.

That means the average household is spending $346.67 more per month to purchase the same basket of goods and services as they did a year ago.

With food costs soaring and medical expenses piling up, many seniors are forced to use plastic just to fill up their tanks with $5.00 per gallon gas. On top of that, credit card interest rates are projected to spike to an average of 19% by the end of 2022.

According to the Federal Reserve, the total debt burden for senior consumers over age 70 increased 543% from 1999 through 2019. More recent studies show that secured and unsecured debt for seniors began to increase in 2021-22 following the pandemic.

The new reality is voiding debt during retirement now seems impossible for many.

Is a Recession Likely in 2023?

According to a recent CNBC–CFO Council survey, more than 75% of chief financial officers said that they expect the U.S. will go through a recession during the first half of next year (2023).

The majority of the CFO respondents also stated they expected the Dow Jones Industrial Average to fall below 30,000 points, representing a 9 percent fall from its current level, according to CNBC. 

As reported by MarketWatch this week, a separate poll of leading economists conducted by the Financial Times revealed that 70% of the respondents expected a U.S. recession in 2023.

The impact of an upcoming recession on the silver tsunami population will vary based on how well they have prepared for their retirement years. For many, it may mean downsizing their home, reducing discretionary expenses, and going back to work part-time.

Getting Serious About Life Settlements

As we’ve mentioned previously in our blog articles, some seniors who no longer need the income protection provided by life insurance policies continue to maintain them in order to leave a cash legacy to their grown children. It’s hard for many seniors to let go of that notion, even if the premium payments have become a financial burden.

For retirees who have been undecided about selling a life insurance policy, it may help to know how other seniors have benefitted from doing so.

According to survey statistics recently released by the Life Insurance Settlement Association, every year thousands of seniors are selling their unwanted policies to address a wide range of financial goals. The top two reasons include paying for medical expenses and improving their lifestyle.

• 3,000+ life settlements were transacted in 2021
• $750 Million: The total amount of cash consumers were paid in 2021 for their policies
• $660 million (7.8 times) beyond cash surrender value was paid out to seniors
• $1.35 Million: The average net death benefit per transaction in 2021

The proceeds from selling an unwanted policy may be used for any purpose. For example, the policy seller showcased in this success story received $400,000 which he used to pay off medical debt and avoid bankruptcy.

Next Steps

Senior clients over the age of 65 are facing a unique set of financial challenges in today's economy. Financial professionals and their clients have an opportunity to "think outside the box" and determine whether selling an obsolete policy could be the solution to greater financial stability.

Contact Trust Life Settlements at 800-216-2513 with your questions, or visit our website to complete our qualification worksheet.