The recent economic crisis in the United States has put a severe crimp into the pipeline of American retirement cash flow. Nearly 51 percent of U.S. households are "at risk" of not having enough to maintain their living standards in retirement, according to the October 2009 National Retirement Risk Index,* a special project of the Center for Retirement Research at Boston College. But how did things get to this point? Was it all as a result of the recent economic downturn? Admittedly a lot did come about as a result of recent events, but is it symptomatic of something bigger?

Hispanics, one of the fastest growing minority populations in the country, are slightly younger than most average Americans, but they too, are particularly at risk. An October 2009 study by the Hispanic Institute For Americans For A Secure Retirement found that only 41 percent of Hispanic workers say they have saved money for retirement.

Is the future for retirees as bleak as it seems? Maybe not.  Some Hispanic retirees have discovered a source of supplemental income that can help tide them over during rough patches: their whole life insurance policies.

Many retirees and pre-retirees are counting, if necessary, on tapping the cash value of their whole life insurance policies – without tax or penalty – to see them through in a pinch**. Their policies’ cash values, which are guaranteed to grow, also can offer protection against the erosion of income caused by rising inflation, declining interest rates, and higher income tax rates.

Gabriel Angulo, a business owner and father of three in Miami, Fla., bought a whole life insurance policy from Massachusetts Mutual Life Insurance Company (MassMutual) five years ago after the birth of his youngest son, when a neighbor had a fatal heart attack, leaving two children behind. After research, he purchased whole life insurance because of the permanent death benefit for his family. 

Whole life insurance is particularly well-suited forsupplemental retirement planning, as it creates flexibility that enables policyholders to help address their needs and circumstances as they change over time.

Guarantees are one of the many great aspects of whole life insurance. The death benefit is guaranteed; the premiums are guaranteed, and growth of the cash value is guaranteed. It’s a piece of your financial plan that you don’t have to worry about. 

While a whole life policy’s cash value can be an effective way to supplement retirement income, it is not recommended to access the cash in the policy for non-emergency needs or desires, such as consumable goods or vacations. It also is not advisable to tap the policy’s cash value when the policyholder’s top priority is preserving the death benefit, such as when wealth transfer or estate taxes are more important to the overall strategic financial plan.

To learn more about how whole life insurance can help with retirement planning, visit massmutual.com/life.

        
* http://crr.bc.edu/special_projects/national_retirement_risk_index.html

** Access to cash values through borrowing or partial surrenders will reduce the policy’s
cash value and death benefit, increase the chance the policy will lapse, and may result
in a tax liability if the policy terminates before the death of the insured.