If your parents are in their mid-60s today, there’s a 50% chance that at least one will live into their 90s. At the same time, only 55% of the baby boomer generation have some retirement savings and, of those, 28% have less than $100,000. The retirement gap our country faces is a looming concern that is especially worrisome for the sandwich generation — a group of people, typically in their thirties or forties, who are responsible for bringing up their own children and increasingly the care of their aging parents. In fact, 64% of millennials expect to financially support their parents or in-laws in old age.*
Adult children concerned about baby boomer parents running out of retirement resources have a new option: AgeUp. Launched today, AgeUp is a new kind of annuity product, created by a team within Haven Life and issued by our parent company MassMutual, that is designed to help protect families from the financial risk of loved ones living into their 90s and beyond.
We spoke with AgeUp General Manager Blair Baldwin to explain how AgeUp works, who it is right for, and why buying it for your parents can make life less hard.
Why create AgeUp?
Blair Baldwin: There are 76 Million Baby Boomers in the US, age 55-75, and this generation is living longer than any before. It’s anticipated that a third of 65-year-olds will live into their 90s, and 1/7 will live beyond their 95th birthday. While living longer is generally a great thing, few Baby Boomers will be financially prepared for it and the burden will fall primarily on their adult children.
If term life insurance solves the problem of protecting families from the financial strain of a loved one dying sooner than expected, AgeUp helps to buffer families from the financial strain of supporting loved ones who live much longer than their current financial reality allows.
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AgeUp is an annuity and annuities sometimes get a bad rap. Is that deserved?
Annuities have a reputation for being expensive and complex, which makes sense as they are typically sold to older, more affluent consumers who have more complex financial needs.
We built AgeUp to be relevant to a younger demographic, and to be financially accessible to all with monthly premiums starting at just $25.
In contrast, most annuities today have a hefty required minimum payment of $5,000 or $10,000, and those that allow for ongoing contributions often have minimum payments of $500 or more. Our affordability means that we can help a whole lot more people.
Who needs AgeUp?
AgeUp is for anybody that’s in their 30s and 40s who is concerned about the financial implications of their parents’ longevity.
The people who are most interested in AgeUp have some family history of longevity. For example, they might have a grandparent who lived until 98 or 102. These optimistic worriers hope their parents will live to 100 and beyond, but are worried about who will cover the costs.
How does AgeUp work?
AgeUp converts small monthly payments into larger monthly payouts for the rest of your parent’s life once they reach a selected age, between 91 and 100.
First, you choose your monthly payment, which, as I said, can be as low as $25. Every time you make a monthly payment, that payment buys a small slice of guaranteed future income.
Then, you decide when you want the payouts for your parent to begin – known as the trigger age – and whether you want your money back if you or your parent passes before the trigger age.
You can choose from two annuity options at purchase, one of which returns 100% of the money you’ve paid until that point if you or your parent dies before the payout age. That means you get your money back, but the monthly payouts will be lower.
With the second option, the payouts will be higher, but if you or your parent dies before the payout age, you get nothing back.
To qualify to buy AgeUp, your parents have to be between the age of 50 to 75. The buying process is simple, straightforward and 100% digital at age-up.com. There is no medical exam or credit underwriting.
How much does AgeUp cost?
We have a calculator to help you figure out if the monthly payments and payouts make sense for your financial situation.
Here are examples of monthly payouts for an adult child who buys AgeUp for a 65-year-old parent at $50 per month:
|Trigger age||With early death benefit||Without early death benefit|
|When monthly payout for life starts||You get money back if you or loved one dies before trigger age||No money back if you or loved one dies before trigger age|
This hypothetical illustration assumes the contract’s current purchase rates will not change for future purchase payments. It is likely that they will change, and actual values will be higher or lower than those in this illustration, but will not be less than the purchase rates in effect on the day a purchase payment is received.
How should people talk to their parents about AgeUp?
I’d recommend people engage their parents in a dialogue about money and retirement as early as possible. If they have siblings, they should include them in the family talks too.
AgeUp presents people with an opportunity to have a discussion with parents and siblings about a shared vision for their parents’ financial future.
What’s next for AgeUp?
Much of our work over the next 12 months will be understanding how AgeUp resonates with our customers.
While we’ve started with helping adult children protect their boomer parents, in 2020, we’ll be introducing a way for people in their 50s, 60s, and 70s to protect against their own longevity and purchase AgeUp directly.
One of the things that excites us about AgeUp is that we’re actually creating an entirely different category of products to help more people with retirement.
*Based on internal research conducted by the team who designed AgeUp.
AgeUp is a Deferred Income Annuity (ICC19DTCDIA) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111 and offered exclusively through Haven Life Insurance Agency, LLC. Contract and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in Arkansas is 100139527.
Real Rate is based on your application and third party data obtained during underwriting.
Haven Term is a Term Life Insurance Policy (DTC 042017 [OK1] and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. Policy and rider form numbers and features may vary by state and may not be available in all states. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Our Agency license number in California is OK71922 and in Arkansas, 100139527.