Today's Hack

Is life insurance something you should have as a part of your retirement plan? Why or why not?

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Show Notes For This Episode

Other Retirement Facts:

Typically, we think of life insurance for a young family to care for your spouse and kids if the worst were to happen. Do you really need life insurance though once the kids are grown? Should you have life insurance in retirement?

No one loves paying insurance premiums, whether it’s for your house or car or life insurance. But when you need it, you’re glad to have it. How do you determine whether you need life insurance or not in retirement? Run a stress-test on your plan. What are the numbers when one spouse passes away? Social Security income will be reduced, perhaps the pension income lost or reduced as well. Meanwhile, taxes go up.

There are general rules of thumb of how much you need in life insurance, but the best way to figure it out is to run the math. Past the traditional need of life insurance, what are some strategic uses of life insurance in retirement? You might not need life insurance as much then, but it could be used as an investment vehicle to pass along an inheritance. Between recent tax changes and proposals, life insurance might be a tool more people turn to.

Depending on your life insurance coverage, it can also be a great vehicle to be used for long-term care insurance coverage. Phil explains how this could work since it’s not technically long-term care but allows you to get access to the death benefit earlier.

Finally, we answer a question from Marie in Plymouth. She wasn’t planning to move but her dream house came on the market. Her current home is paid off, but she would have to take a mortgage out to get the dream house. Is it a bad idea to have a mortgage five years from retirement?

0:31 – What are Phil’s Memorial Day plans?

2:07 – This is not your father’s life insurance.

3:48 – How do you determine if you need life insurance?

5:41 – How much do you need?

7:17 – What are strategic uses of life insurance?

9:49 – With recent changes, will more look to life insurance?

11:28 – How can life insurance help with long-term care?

15:16 – Mailbag: Is it a bad idea to buy my dream house and take out a mortgage right before retirement?

A Quotable Moment:

“Don’t write off life insurance because you just don’t think it fits. Understand it may have a different use than where you think it fits.”

-Phil Putney

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