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Supplement retirement savings with a life settlement 2010-01-19 Conventional wisdom has it that retirees should draw down between 4 and 5 percent of their total savings each year, but that rule of thumb may be too simplistic and some retirees may need the extra income afforded by a life settlement. The instruments put a person's life insurance to work, offering a settlement amount that is greater than the surrender value but less than the face value of the policy. Some retirees may turn to life settlements after finding that their savings were decimated by the late-2008 stock market collapse. While the market has rebounded since its lows of last March, portfolios are likely to be smaller than they were before the financial system meltdown. Other people may look to the settlements to pay for medical care or upgrades to their homes. Life settlements can be used for these and other needs, experts suggest. But there is little consensus on how much savings a retiree should draw on each year. While 4 to 5 percent is the widely recognized norm, an individual's circumstances should be taken into account, financial advisor Michael Busch said recently to the Dallas Morning News. Depending on a person's Social Security benefits or portfolio allocation, Busch suggested, his needs can deviate drastically from the 4 to 5 percent standard.  |
