Survey Finds Financial Stress High in U.S., Fueled by Retirement Planning Concerns

Jun 11, 2018 3:41:00 PM / by Darwin Bayston, CFA


A recent Harris Poll survey, conducted on behalf of Purchasing Power, found that 87 percent of American adults are at least somewhat stressed about their current finances, with nearly one in four (23 percent) indicating they have either “quite a bit” or “a great deal” of financial stress. In spite of the healthy U.S. economy, 39 percent of full-time employees revealed that their stress level has actually increased in the past 12 months.

And while the leading cause of financial stress is the pile of household bills to manage, 37 percent of those surveyed reported that a key trigger for their financial stress is retirement planning.

              As disconcerting as this may be to hear, the news is hardly surprising. It comes on the heels of a March 2018 report from GOBankingRates that found more than 4 in 10 Americans (42 percent) are carrying a retirement account balance of $10,000 or less. With so many of our citizens having so little private retirement savings, it’s no wonder that they’re struggling to manage the stress and anxiety related to their available financial resources.

              Financial planning experts recommend several proven strategies to raise cash during retirement. Here are a few that you might want to discuss with your family members or professional advisors:


  • Find a flexible job

    Many retirees find that they’re delighted to have exited the 9-to-5 rat race of a full-time career, but they need to continue staying engaged in a job environment to keep themselves active in something other than travel and leisure time. Today’s job market is more dynamic — and healthier — than it has been in decades, with all sorts of opportunities for part-time or contract employment. If you’re willing to accept a flexible job, you can achieve that objective of staying active and engaged while at the same time earning some income to cover part of your financial needs in retirement.


  • Delay Social Security

    The amount of money on your monthly Social Security check depends on your age when you claim your benefits. The longer you wait, the more you will receive. You can claim Social Security as young as 62 or you can wait until you are as old as 70, but your benefits increase roughly 8 percent annually if you are able to delay your claim. If possible, you may want to supplement your retirement income with other cash sources and claim Social Security later.


  • Downsize

    Virtually every senior has gone through this mental exercise: is the house in which we raised our family the best choice to meet our needs in retirement? This is a highly emotional question to pose because our homes are so directly connected to a flood of memories that we made over the years. But if you find yourself dealing with financial stress brought on by the amount of cash available in your retirement fund, it’s a good idea to be honest with yourself about whether you can accept living in a smaller house — or living in a less-expensive area — as a strategy for freeing up cash that can be used to subsidize your retirement.


  • Unlock cash from “illiquid” assets

Many seniors overlook another potential strategy for raising funds and reducing their financial stress in retirement. Look around and some of the assets you own that might be able to be liquidated for immediate cash. For example, do you own any art or jewelry that was prized when you were younger but is no longer serving a purpose in your life? Do you qualify for a reverse mortgage that you could take out on your home and use as a line of credit that gets paid off down the road when the home is sold or you pass away? Do you own a life insurance policy that you no longer need or can afford?


Of these retirement funding strategies for seniors, one that is quickly growing in popularity is the sale of a life insurance policy to a third party, which is known as a life settlement. Candidates for life settlements are typically aged 70 or older, with a life insurance policy that has a death benefit of at least $100,000. The senior gets a cash payment for transferring the ownership of the policy and the purchaser assumes all future premium payments in exchange for the benefit when the insured passes away.

Life settlement transactions grew by 19 percent in 2017, with the amount of cash paid to insureds who sold their policies soaring to more than $600 million, according to a report earlier this month in The Deal. To learn more about whether a life settlement might be a good option for you, please explore this website to get connected to a qualified life settlement professional or simply call the LISA office today at 407.894.3797.

              By the way, it turns out that Americans continue to showcase their optimism about the future, even when it comes to financial stress. One out of three adults (34 percent) who responded to Harris Poll in the Purchasing Power Financial Stress Survey foresee their financial stress level going down in 2018. Here’s to hoping that comes true!

Darwin Bayston, CFA

Written by Darwin Bayston, CFA

Darwin Bayston is President and CEO of the Life Insurance Settlement Association (LISA). His charge is to extend the outreach of the Association to all participants of the life settlement industry from consumers to capital providers, including producers, brokers, providers and service providers who are part of the life settlement market. He was previously Managing Director of Life Settlement Consulting & Management (LSCM), founded in 2004 and specialized in life settlement policy and portfolio valuations, and life expectancy analysis. He has published several articles and participated as speaker at a number of life settlement conferences. Previous to that he operated an investment advisory firm. From 1980 to 1993, he served in several capacities, including President and CEO the CFA Institute (and its predecessor organizations). While at CFA, he founded the continuing education program, was editor of the CFA Digest and supervised research projects funded by the Research Foundation of the ICFA. He began his career as an investment analyst with a Midwest life insurance company. Mr. Bayston has been Chairman of the Martha Jefferson Hospital Foundation ($100 million), a member of the Hospital’s Finance Committee and a past member of the Board of the Institute for Quantitative Research and Finance (Q Group).