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Have you ever heard of the ‘three-legged stool’ of retirement? If you have, it’s probably been a while. Once considered the ideal retirement model, the three-legged stool has fallen out of favor because two of the three legs - Social Security and defined benefit pensions - are not as stable as they once were. Consider the following:

- According to the Bureau of Labor Statistics, just 18% of private sector workers have a defined benefit pension,[1] thereby eliminating a guaranteed source of lifetime income. 

- In 2015, Social Security benefits replace just 40% of the average workers salary.[2] What’s more, the Social Security trust fund is expected to deplete its reserves by 2034, and will be able to fund approximately 75% of benefits after that.[3] 

Fortunately, there are ways to reinforce the third leg of the stool - retirement savings and other personal assets - so that you can still enjoy a long and fulfilling retirement. Here are two proven funding sources you may want to consider if you need to compensate for any shortcomings: 

- With people living longer than ever, it’s important to make sure the money you have set aside will last the rest of your life. While Social Security provides a lifetime supply of income, it may not be enough to support your desired lifestyle. If you think you’ll need additional income and do not have a pension, a lifetime income annuity can be an excellent way to make up the difference. 

- Although the primary purpose of life insurance is to deliver death benefit protection,many permanent life policies accumulate cash value. If your need for protection decreases over time, you can borrow against this cash value - tax-free in most cases - and use the money to supplement your retirement lifestyle.[4]  

While the three-legged stool of retirement may be a bit wobbly, the good news is a secure future is still within reach. The main difference these days is that you will most likely have to build it yourself.  

[1] Economic Policy Institute, “Private-Sector Pension Coverage Fell by Half over Two Decades,” January 11, 2013 @

[2] Center on Budget and Policy Priorities, “Policy Basics: Top Ten Facts about Social Security,” August 13, 2015 @

[3] U.S. Department of the Treasury, “Fact Sheet: Social Security and Medicare Trustees Report,” July 22, 2015 @

[4] Loans against your policy accrue interest and decrease the death benefit and cash value by the amount of the outstanding loan and interest. 

Posted 3:22 PM

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