Life Insurance Can Provide Protection for Your Retirement Plan

Life insurance is a frequently overlooked component of retirement planning for various reasons: Some people may already have life insurance in place and think the policy they set up years ago still meets their needs. Others have life insurance provided through their employer and don’t consider that the life insurance policy goes away when they stop working.

There’s also a myth that life insurance is for younger people, those with kids still at home or needing to replace income during their primary earning years. Historically, the prevailing advice in the industry has been to eschew permanent insurance in favor of term and invest the difference – then let the life insurance go when the kids are grown and the house is paid off.

Sure, your need for life insurance is probably different at age 65 than at age 35. But we believe your need doesn’t necessarily change over the years – your why and how much does. Here are a few things to consider as you evaluate your potential need for life insurance in your later years.

Do you have a potential need to replace a spouse’s income?

When we help you create a plan for your future, we do so with the assumption that everything will go to plan. And if you’re married, one of those assumptions is that both of you will live a long life – and you’ll enjoy Social Security benefits and income from retirement accounts for two people.

But as we all know, life hardly ever goes to plan. When one spouse dies, you could lose income from a pension, an annuity, Social Security or a part-time or full-time job. In 2023, retirees’ average Social Security benefit is $1,706 per month or $20,472 per year.¹ That’s a significant loss of income and could mean that the surviving spouse has to make dramatic changes to their lifestyle if the funds don’t come from another source.

Does your existing policy still work for you?

The life insurance industry has changed dramatically over the past decade, with companies offering innovative new products with exciting benefits. For example, say you’re a healthy 65-year-old with no serious health history. You could purchase a life insurance policy offering a chronic care rider, which would provide for your long-term care if needed.

Many newer policies also offer Accelerated Death Benefits, providing funds for medical expenses before your death if you’re diagnosed with a terminal illness. These features allow you to reap the benefits of life insurance both during your lifetime and after your death and provide much more value than you paid in premiums.

Do you want to leave something to people or groups you care about?

Most people we work with want to provide for their loved ones when they die. What they don’t want to do, however, is saddle them with an unwelcome tax bill resulting from that inheritance. Life insurance can allow you to pass money to the next generation efficiently and effectively, creating the legacy you envisioned.

While it’s not a fun topic – who wants to talk about what happens when they die? – life insurance is still a critical part of your retirement planning.

¹ Rachel Christian. Bankrate. Oct. 4, 2023. “What is the average Social Security check?” https://www.bankrate.com/retirement/average-monthly-social-security-check/. Accessed Oct. 12, 2023.

Our firm assists retirees and pre-retirees in the creation of retirement strategies utilizing investment and insurance products. Advisory services are offered through B.O.S.S. Retirement Advisors, a Registered Investment Advisory firm. Insurance products and services are offered through B.O.S.S. Retirement Solutions. Marketing materials are provided by Infinity Marketing Services. Our fiduciary advisors assist in customized retirement planning and financial services to help today’s retirees get to and through retirement. To see a list of services please visit us at bossretirement.com/services.

This content is provided for informational purposes only. It is provided by third parties and has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. We are not affiliated with any government agency including the Social Security Administration.