Three-quarters of American workers expect to continue working through their retirement years. Of those that do, 39 percent say they will because they like to work, a third say they have to work because they need the money and some unsurprisingly say that both reasons factor into their decision to continue working after retirement age. If those individuals continue to work, it will be a huge shift from today where about 15 percent of retirees choose to continue working. Whatever the reason, if you continue to work, you should consider purchasing life insurance.
- To protect against loss of income. Typically it is younger people who choose to purchase life insurance to protect their family against the loss of income but as more and more of us consider working past retirement age in order to continue paying bills, retirees might consider life insurance to protect against a serious loss of income for however much longer they expected to work.
- To protect against loss of retirement benefits. Another reason to consider life insurance is if you and your spouse depend upon Social Security to make ends meet. When one of you dies, the Social Security and other retirement benefits will most likely take a hit so it might be a good idea to purchase protection against that loss.
- If you have children or other dependents (including aging parents) at home who will continue to need to be cared for. A life insurance policy can continue to provide for people who depend upon you once you are gone. Adult children moving back to live with mom or dad because of a lack of a job or high educational bills will continue to need some support immediately after a parent’s death. Aging parents may suddenly need to hire someone to provide care that they currently receive at little or no cost. You may want to consider a life insurance policy as a means to provide your beneficiaries with an inheritance.
- If you have outstanding debts. It used to be that by the time people retired their mortgages were paid off. That’s no longer necessarily the case. You may also want a policy if you have estate taxes or other significant debts you expect to need to pay off.
- If you own or co-own a business or have substantial joint financial obligations. If your passing would result in leaving someone else legally responsible for that debt or you have an essential employee who would need short-term support, insurance could protect against an unexpected loss.
- To cover expenses you racked up while dying. Funeral or cremation expenses or the expenses related to end-of-life medical care might otherwise require a surviving spouse to dip into savings that are already likely to take a hit from loss of revenue or additional expenditures.
- To replace you. Car care, lawn care or accounting services are just some of the services a spouse may provide as part of being a couple. Those things will continue to need to be covered but will now likely have a charge where there was none before.
How do you determine how much life insurance you are likely to need? This article recommends that you determine how much longer you’ll need to work and multiply that by how much money you expect to earn to come up with a death benefit amount. So, for instance if you earn $50,000 annually and expect to work for an additional 5 years, you’ll need $250,000 in insurance.
If you are currently working and that place of business provides life insurance coverage, keep in mind that your employer-based plan may have reduced benefits after you reach 65.
There are a lot of variables for determining whether or not a life insurance policy is in your best interest. Your best option is to talk to a financial advisor or Elder Law Attorney to find out if a policy will provide you with the benefits you are looking for or if some other product (or no product at all) might be more useful. Please contact our office if you have any questions or would like to be put in touch with either expert.