Tag: social security

The Insufficiency of Social Security to Fund Retirement

funding retirement - magna life settlements

With a checkered history and the very real fear that funds could be depleted before many current workers can benefit from them, Social Security may no longer be the safety net it was envisioned to be when it was established nearly 85 years ago. Today’s seniors, as well as younger Americans planning for retirement, must pursue other financial avenues to ensure comfort during their later years.

The timeline of Social Security, from the time it was created to provide benefits for workers who retire at age 65 or older, includes several expansion measures and other adjustments to deal with the nation’s financial downturns. The last major legislation designed to protect the fund, passed in 1983, called for a gradual increase of eligible retirement age from 65 to 67 and boosted the Social Security tax with the hopes of generating a surplus to help take care of Baby Boomers when they reached retirement age.

Magna Life Settlement CalculatorThat day has been reached, and the surplus is disappearing fast. Following are three of the chief causes of Social Security’s decline:

An Imbalance Between Workers and Beneficiaries

The expected surge in retirees as Baby Boomers have left the workforce has been met with a corresponding decline in the number of workers, so that the contributions to the fund are not nearly enough to cover those who need it today. The worker-to-beneficiary ratio is expected to fall from 2.8-to-1 to as low as 2.1-to-1 by the year 2035. (source: The Motley Fool)

An Upward Trend in Life Expectancy

Studies from the Center for Disease Control predict that people born today can expect to live to an average age of 78, up from 70 just 50 years ago. Notably, however, life expectancy declined slightly between 2014 and 2017 not because of increased mortality among seniors, but due to the alarming rise in suicide and drug overdose fatalities. The broad trend—that Americans are living longer—will lead to an ongoing drain on the Social Security nest egg.

Record Low Yields for Special Issue Bonds

These bonds, traditionally the source of interest income for the Old-Age, Survivors, and Disability Insurance Trust (OASDI) that funds Social Security, are generating less income than ever due to historically low interest rates. If interest rates stay low, the bonds will produce yields that are often lower than the inflation rate. As a result, the Social Security surplus will disappear faster without a steady source of income to stabilize it.

Future legislation could very well address the insufficiency of Social Security and take measures to shore up the program, but seniors can’t count on the survival of an issue that is a known political football with a host of sustainability issues. A life settlement can be an ideal way for many seniors to secure a cash windfall in exchange for an unneeded life insurance policy, and the proceeds from the settlement can help fund retirement expenses that Social Security once covered for past generations. For more information about life settlements, contact Magna today.

How Selling Your Life Insurance Policy May Help Your Retirement

retirement calculatorPlanning for your retirement can be a daunting experience. There is so much to think about, especially the amount of money you need in order to retire comfortably. Generally, the rule of thumb is that the money you may need when you ultimately retire should fall somewhere between 70 to 85 percent of your income. 

To estimate how much money you may need for your retirement years, you could estimate approximately how much you would be spending in the future. There are certain expenses you probably won’t have to worry about once you’re retired, including expenses related to your children. Your mortgage may be paid off, and you may not have to worry about commuting or other work-related expenses. 

At the same time, there could be new expenses, such as healthcare costs. And you may also travel more after retirement since you will have free time that you didn’t have when you were working.

You should maximize your income flow during your working years so that you can be comfortable after you retire. Following are some of the key ways to increase your retirement income.

Retirement Calculator: How to figure out your retirement score:

Social Security Benefits

Avoid withdrawing money from your Social Security benefits until at least the retirement age of 65 or 67 if you were born in or after 1960. If you continue working until 70, you will receive an additional benefit of eight percent for each year you wait to retire after age 65.

Company Benefits

If your employer offers company benefits, you can take advantage of them and choose those that can give you the maximum income after retirement. You can choose the right investments to reflect your age and risks in a 401k plan. Be wise about when you withdraw so that you can get the most benefit from the plan.

Personal Savings

You can use your personal savings toward your retirement income, but the better option is to make deposits to mutual funds, which can give you considerably more money in the future as they grow.

Whole Life Insurance

If you have a whole life insurance policy, borrowing against the cash value and investing the balance can give you more income when you retire.

Reverse Mortgage

A reverse mortgage can benefit you if you are 62 or older. It lets you free equity in your home and ensures that you don’t have to make future payments.

Avoid Debt

Finally, another good way to ensure that you can retire comfortably is to avoid the trap of debt. Be smart when using credit cards and when taking out loans. Always pay the maximum toward your balance on both in a timely manner. Avoiding getting into debt can help you enjoy full control over your finances. You can also live stress-free when your finances are in good condition. As a result, you have a better opportunity to retire with a sense of security.

Bill HR 7203 to Allow Life Settlements to Fund Long-Term Care

Bill HR 7203

A new bill being weighed by the U.S. House of Representatives would make provision for the tax-free rollover of life settlement proceeds into tax-free accounts dedicated to long-term care. The bill, H.R. 7203, was sponsored by Rep. Kenny Marchand (R-TX) and referred to the House Ways and Means Committee on November 30.

H.R. 7203, known as the Long-Term Care Account Act, would provide a significant benefit for seniors who are facing the daunting costs of long-term care. If those individuals have a life insurance policy that is no longer serving them, the bill would permit them to easily use the money from a life settlement to fund an assisted care facility, in-home care or other treatments deemed medically necessary.

The provisions of the Long-Term Care Account Act include:

Tax-free transfer of funds

The tax-free transfer of funds from a life settlement into accounts used exclusively for long-term care expenses. That money can be used for long-term care insurance or any “qualified health expenses” that a medical practitioner would recommend to treat health impairments or maintain health for retirees.

– As long as the distributions from life settlements into the long-term care accounts are used for their stated purpose, they will be exempt from any tax. If funds are used for unauthorized purposes unrelated to long-term care, those expenditures will be subject to both income tax and a 20 percent excise tax.

– If the funds distributed to the accounts from life settlements are not spent on long-term care expenses, they can remain in the account untaxed until the death of the account holder and that person’s spouse.

H.R. 7203 is a win-win for seniors

The Long-Term Care Account Act is a win for seniors looking for new revenue sources, pairing the prime opportunity of a life settlement with the pronounced need of long-term care. Rising health care costs during retirement are one of the chief reasons people over 65 investigate life settlements, and the passage of this legislation would link the two in a way that will provide tangible benefits to Americans seeking to make the most of their retirement years.

Please don’t hesitate to urge your elected representatives to support this important bill. For more information about life settlements or the pending legislation’s, you can contact a Magna representative by scheduling a call today.


Trends in Today’s Aging Americans

Trends in Today's Aging Americans - Magna Life Settlements

Everyone who works with seniors knows that the American population is older than ever before, but what are the broader implications of this upward aging trend? How can people over 65 and their advocates optimize the retirement years? Dan Veto, a senior advisor for Age Wave, addressed these questions in depth at the Life Insurance Settlement Association (LISA) Life Settlement and Compliance Conference, held in Orlando in October.

Age Wave, considered one of the nation’s leading thought leaders on the aging U.S. population, engages in relevant research and consulting for a variety of industries that seek to enrich the lives of individuals over 65. Veto’s keynote was geared toward helping attendees understand how to best serve seniors in a rapidly changing demographic landscape. Early in his talk, Veto set the stage by pointing out that “two-thirds of the people in the history of the world who have attained the age of 65 are alive today.”

Research from Age Wave shows that 57 percent of seniors regard the retirement years as a new chapter in life, full of opportunity, versus “a winding down of life”(20 percent) or “a continuance of what life was” (23 percent).

More seniors surveyed about the factors that disrupted their work and retirement plans indicated that a personal health problem forced them to make different choices, and a gap exists between expectation and reality regarding the eventual need for long-term care. While just 37 percent of seniors believe they will need long-term care at some point, 70 percent actually do need it, and therefore many are ill-equipped for the financial demands.

The convergence of a multitude of factors, including rising health care costs, the age wave in America, and the growing gap between the average retirement age and average life span, has raised the profile of life settlements as a valuable option for seniors looking to meet unexpected needs and write the best possible last chapter for their lives.

“These social and economic trends create rising opportunities for life settlements as an option for some seniors who may benefit from an ‘equity release’ of a life insurance policy,” he said. “This may be an option for them to generate income to help fund their retirements.”

Skyrocketing Premiums Present Challenge For Universal Life Policy Holders

Elderly Man Walking Down Street

Older Americans today have many excellent reasons to pursue the sale of a life insurance policy in a life settlement, but one of the most prevalent reasons is the prohibitive cost of paying premiums. And for those maintaining a universal life policy, a recent Wall Street Journal article reports that some are paying double or even triple their original premiums because of an historic drop in interest rates.

According to the piece by Leslie Scism in the September 19, 2018 Wall Street Journal, many policyholders are finding that universal life hasn’t held up well over time, especially when a decade of low interest rates have depleted the tax-deferred savings account linked to the policies. The savings accounts are designed to offset the cost of renewing the insurance each year, but as interest rates have stayed down the accounts have been insufficient to stave off skyrocketing premiums.

The article cited one case study in which a 55-year-old had purchased a $1 million policy in 1988 with an annual premium of $12,000. By the time that individual turned 80 in 2013, the savings account was gone and the premium had jumped to $50,000 a year. In another case, an 85-year-old retired teacher was paying $30,000 a year for his three universal life policies—three times the premiums when the policies were issued.

One expert on the insurance industry, John Resnick, told the Wall Street Journal that many seniors “are sitting on a ticking time bomb, and they don’t even know it.” The article goes on to say, “Universal life is among the reasons Americans are approaching retirement in the worst shape in decades.”

Those who believe they are stuck paying exorbitant premiums while also trying to fund retirement costs like healthcare and housing must be educated about options like life settlements. Rather than surrender a policy, an individual faced with prohibitive premiums might be able to sell his policy for a much higher payout.

Seniors shouldn’t let prohibitively high premiums chain them to a policy that is doing them more harm than good. Depending on the health impairments of the insured and the cost structure of the original policy, a life settlement could yield a windfall considerably higher than the surrender value. When premiums become burdensome or the purpose for originally purchasing the life insurance policy no longer exists, a life settlement can turn a liability into an instant asset.

Providers like Magna stand ready to answer any questions seniors or their advocates may have about life settlements, and they can even access our simple life settlement calculator to determine their eligibility for a sale of their policy.

Bankruptcy Soars Among the Elderly

elderly bankruptcy: Bankruptcy Soars Among the Elderly
Financial concerns have always been a part of the retirement landscape, but two recent studies indicate a precipitous situation for many seniors, with bankruptcy rates for the over-65 population surpassing those at any other time in history.

Some of the most significant data came from a study compiled by four professors in partnership with the Consumer Bankruptcy Project, which collected bankruptcy data from 1991 to 2016. The study’s authors went beyond the unmistakable trends from the numbers to pinpoint the sociological causes for those patterns. Among the most compelling findings of the CBP report:

• The number of people between the ages of 65 and 74 who filed for bankruptcy increased more than 200 percent in that 25-year period. As a result of that jump, the number of seniors within the U.S. bankruptcy system has increased fivefold. One in seven bankruptcy filers in 2016 was over the age of 65.

• As a result of inadequate income during retirement coupled with skyrocketing health care costs, the median senior filing for bankruptcy enters bankruptcy with negative wealth of $17,390, as compared to more than $250,000 for seniors who have not filed.

• More than 62 percent of the respondents in the CBP study identified increasing medical expenses as a “catalyst” for their bankruptcy filings.

“With few exceptions, the road to bankruptcy is long,” the report said. “Combined, more than six out of ten older debtors struggled for at least two years to repay their debts before they turned to bankruptcy for help. Struggling for several years to repay one’s debts is an unfortunate way to spend one’s retirement years.”

Other considerations that the study respondents reported as key factors in their late-in-life financial struggles were shifting Social Security eligibility and the shaky status of many pension plans. The research detected a growing gap between the haves and have-nots among the over-65 population, mirroring a similar chasm between the higher and lower income groups in the population at large.

The second significant study examining the financial challenges of seniors was conducted by the Urban Institute, and it focused on the future distribution of retirement income, as well as the minimum wage and wage inequality. The section of the study related to retirees concluded that the top fifth of U.S. earners between the ages of 67 and 75 will see a steady increase in their income in the next seven decades, whereas the bottom fifth will see a drop twice as dramatic as the increase seen by the top fifth.

“People who experience high wage inequality during their working years are likely to experience high retirement income inequality, because Social Security benefits are tied to lifetime earnings, and people’s ability to save for retirement depends on how much they earn,” stated the report’s summary.

Using solid data, these studies prove statistically what many seniors understand anecdotally—that retirement years often present difficult financial challenges even for those who prepare. Many seniors are unaware of life settlements, which can provide a valuable source of income for those who need extra help with health care or other expenses. To find out if you might qualify for a life settlement, start with Magna’s life settlement qualifier.

How to Navigate Your Expenses in Retirement

How to Navigate Your Expenses in Retirement - Magna Life Settlements

It’s something every adult understands—saving for retirement is a necessity. But beyond the nebulous idea of “putting money away for later,” how much do we really know about the actual costs incurred by American seniors? Retirement expenses are rising, making it more imperative that people over 65 and their advocates understand the details of income options like life settlements. Following are some of the primary areas where expenses are rising for seniors:


This is the category that hits many senior adults the hardest, because of the obvious surge in medical needs as people age. An article from CNN Money estimates that the average 65-year-old man will spend $189,687 on healthcare in retirement, while an average 65-year-old woman will spend $214,565. Because medical situations and their attendant costs are unpredictable, those expenses are one of the key reasons seniors need to seek alternate sources of income.


Even if healthcare costs can mount fast, housing expenses are the most consistent hits on a senior’s budget. A 2015 study from the Social Security Administration indicates that households with people over 65 spend about 35 percent of their funds on housing, more than twice the amount spent monthly on out-of-pocket healthcare, which came to 13 percent. When all of the costs associated with housing are considered—mortgage or rent payments, utilities, maintenance and furnishings—seniors spend an average of $14,034 annually, according to a breakdown in U.S. News and World Report.

Transportation and Travel

Even though some seniors see a drop in gas costs when they stop working, transportation is still the second-largest expenditure, according to the Social Security Administration study, comprising 15 percent of the average senior’s budget. Transportation costs, as well as money spent on hotels, food and other entertainment, tend to rise in the retirement years because of the extra time for travel in retirement years. To mitigate this expense, seniors should seek travel discounts just for those 65 and older, and they should also take advantage of the freedom to travel during off-peak times when working people are unavailable.

Even though those three categories are typically the ones that cause the most headaches for seniors, other expenses can also be unexpectedly high during retirement—food, education costs for family members, insurance and entertainment, to name a few. Because retirement years can be expensive and seniors want to get the most they can out of that time in life, a life settlement can turn a burdensome unwanted life insurance policy into a valuable asset. To learn more, set up a call with a Magna representative today.

Top 3 Reasons Why Older Americans Are Selling Their Life Insurance for Cash

Top 3 Reasons Why Older Americans Are Selling Their Life Insurance for Cash

Americans have more choices than ever—about television shows, car services, or where to get their news, shop, and book travel. So it would follow that seniors seeking financial help during retirement should be informed about every viable option, including life settlements. This option, which can convert an unneeded life insurance policy into a windfall, is becoming better understood and more popular among the over-65 population. There are three primary reasons for this surge in life settlements:

Scarcity of retirement funding

Retirement funding is so vital that most young adults make decisions regarding their late-in-life income in their ‘20s or ‘30s, putting away money each month so that they can have stability during their golden years. Unfortunately, even those careful efforts often yield insufficient funds for the needs during retirement; one recent study showed that the number of Americans over 75 who filed for bankruptcy tripled from 1991 to 2016. More than 62 percent of the respondents in the study indicated that high medical costs were a key cause of the bankruptcy filing.

New tax laws

Several provisions in the March 2018 Tax Cuts and Jobs Act have made life settlements a more favorable option, including the doubling of the exemption for the estate tax (to $11.2 million per individual and $22.4 million per couple), the addition of a new tax credit for non-child dependents and the inclusion of premiums in the tax basis, which reduces tax rates on life settlements. The new tax code has allowed those who might not have previously qualified for a life settlement to reconsider their situation.

Better education about life settlements

According to research from the Insurance Studies Institute, more than 500,000 seniors lapse their life insurance policy annually, but ninety percent of seniors polled reported that they would have considered a life settlement if they had been made aware of the option. That statistic is likely to change, as life settlements gain a higher profile and financial advisors take seriously their fiduciary responsibility to make clients aware of the settlement opportunity.

Life settlements can convert an unprofitable life insurance policy into a valuable source of income for retirement, so seniors who might have had a change in circumstance in regard to their policy should investigate a life settlement. For a simple calculator that will allow you to assess your eligibility, visit Magna Life Settlements today.

Population Growth in Seniors Over 65 Indicates Progress in 3 Key Industries

Population Growth in Seniors Over 65 Indicates Progress in 3 Key Industries

According to data collected in 2012 by the U.S. Census Bureau, the sector of Americans over the age of 65 is expected to double by 2050, comprising about 20 percent of the nation’s population. This trend of aging baby boomers will affect demand in a number of industries geared toward seniors. Specifically, the graying of America is affecting life settlements, healthcare and care giving.

What are the implications for advocates and professionals seeking to serve the growing needs of U.S. seniors? 

Three key industries and the projections for how they will keep pace with surging demand

Life Settlements

Every year more than 500,000 life insurance policies lapse, with the policy holder getting no financial benefit, while only 1,250 seniors choose to sell their policies for a life settlement. With the surge of people over 65 and the growing profile of life settlements as an option, companies that help seniors get top dollar for their life insurance policies are more responsive than ever. With minimal research, seniors can decide whether life settlement is right for them and find the right buyer without a middleman.

This direct-consumer relationship in life settlements will become more prevalent as more seniors see the benefit of turning their life insurance policies into income. The percentage of seniors opting for life settlements, now only a quarter of one percent, will grow along with the older population, especially since a recent study by the Insurance Studies Institute shows that 90 percent of seniors would have sought out a life settlement if they had been made aware of the option.


Even with the boom in the senior population still mostly in the future, health care facilities are reporting a shortage in caregivers trained specifically in geriatric care. As the over-65 population approaches the number of 83 million estimated by the middle of the century, this nation will have a pressing need for doctors, nurses and physician’s assistants who can care for the elderly, and home health care and preventative medicine for seniors will also grow exponentially.

The American Nurse’s Association estimates that by 2022 the U.S. will need more than one million new nurses to care for older Americans. And primary care medicine isn’t the only sector of the health care workforce that needs to intentionally address the coming influx of senior patients; there will also be a need for specialists like psychiatrists, optometrists and podiatrists who specialize in serving people in the over-65 bracket.


A surging population of seniors also means that this country will have more middle-aged adults than ever trying to care responsibly for their aging parents. Serving as a good advocate for elderly loved ones is complicated, and caregivers will need more education than ever to examine the options for financial planning, long-term care, healthcare and other key areas.

Life settlements, which can help seniors pay for healthcare or long-term care using profits from a life insurance policy that is no longer working for them, is one decision caregivers should learn about to help their parents navigate the often-murky world of senior adulthood.

Tax Season Tips for Retirees [2019 Retirement Guide]

tax retiredIt’s the time of year again for filing taxes. While no one wants to pay taxes, this is especially true for retirees who may have limited income or are living on a set budget. No matter the situation, there are options for retirees to help reduce taxes owed and possibly come out with a refund.

Here are some tips to help retirees have an easier tax season:

Free Tax Preparation

Leave the number crunching to the professionals. Free tax preparation is available to people who make $54,000 or less. The Volunteer Income Tax Assistance (VITA) program has IRS-certified volunteers to help people with tax preparation. Those who are 60 years or older may also receive tax help with questions about pension and other retirement-related matters through the Tax Counseling for the Elderly (TCE) program. Locations are available at community and neighborhood centers, libraries, schools, shopping malls and other locations. To locate a VITA or TCE site, call 800-906-9887 or use the online VITA Locator Tool.

Some Medical Expenses Are Tax-Deductible

Medical expenses can include Medicare premiums, long-term care premiums, co-pays at the doctor’s office and the cost of prescription drugs. A deduction on such medical expenses can be claimed in your tax filing if the total out-of-pocket costs exceeds 10% of your adjusted gross income.

Deduct Property Tax and Mortgage Expenses

If you’re a homeowner with an existing mortgage, the mortgage interest and property taxes you pay are deductible in your tax filing. Many times, retirees who are homeowners may also sell their home to downgrade to one that is more suitable for a retirement lifestyle. In that case, there is capital gain exclusion available for up to $500,000.

Certain Donations Are Tax-Deductible

There are many ways to be charitable, including giving away money or donating goods like clothing, a car, or electronic devices to charity. When you itemize the items you donate, you can claim a tax deduction. In some cases, travel to make the donation may also be included in the deduction.

Review “Standard Deduction” or “To Itemize”

The IRS offers the option to file your taxes using a standard deduction or to itemize. The standard deduction for retirees who just turned 65 is $7,900 for a single filer and $15,200 for a couple filing in 2017. The standard deduction is higher for those age 65 and older. Weigh your options in selecting how you want to file your taxes.

Understand How Life Settlement Proceeds are Taxed

If you took a life settlement, you only need to claim income on any proceeds that were more than the cost of the life insurance policy. You can calculate this by subtracting the policy’s cash value from the amount paid in premiums. Learn more about the tax benefits of selling your life insurance policy.

Streamline the Tax Filing Process With E-Filing

If you’re expecting a refund, e-filing your taxes will help speed along the process. One of the benefits of online filing is that there’s no waiting around for a check to come in the mail if you opt for direct deposit, or worse: it getting lost in the mail. Expedite your tax filing by taking care of it electronically.

Tax filing season does not need to be stressful and you can possibly look forward to a refund following some of the tips offered here.


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