Sweet, sweet retirement! This is something I dare say most of us look forward to. Finally a time to put down the workload and instead take up the sunhats and passports. I don’t care what anyone says, Bermuda is lovely any time of year.
Once we finally get to that goal, one of the last things we want to worry about is our financial security. Yet, perhaps this is when we need to consider it most. As far as life insurance goes, there is a common belief that it is no longer needed once we reach retirement. In some cases, this is true. However, many of us may still find ourselves with a strong need for life insurance even after our working years.
The most obvious reason to keep your life insurance after retirement would be for income protection. Just because we have retired does not mean our loved ones won’t experience a financial loss once we have kicked the bucket. We need to ask ourselves “Would the people left behind after I die be stuck with a huge bill? Would they experience a significant loss of income?” If the answer to this is yes, then life insurance is definitely the way to go.
What about those of us that wouldn’t necessarily be leaving family in a difficult financial situation upon our death, but do not want them to have to deal with funeral planning/expenses or additional income to work with? There are also the unexpected events to plan for. We could all use a rainy day fund, right? Life insurance like Sentinel’s Final Expense policies work perfectly to pay out to your beneficiary a flat amount for funeral costs or whatever else they might run into. I know that after I am gone, I would like to leave my spouse with a final gift of sorts. Maybe money to go on that trip with the kids in my memory, some work on the house, or maybe even just an emergency fund. A final gesture of love, if you will.
Moving past this, there are those among us that reach retirement age but don’t have enough saved up to pay for our living expenses. Again, life insurance can come to our rescue. Many life insurance policies build up cash value alongside the death benefit. You can borrow against this to fund your retirement. However, you need to keep in mind that what you borrow does lower your death benefit, but this at least gives you the ability to continue to provide for your family during retirement. I wouldn’t recommend using this as a first option, but if you are in this situation and you have been paying towards a life insurance policy for many years, it is typically an option available to you.
One final point I would like to make: Life insurance can be used as a safety net from retirement plan investment losses. In the United States, a lot of us save up for retirement using investment options that either go up or down depending on the markets. In the event of a stock market crash or downturn, we have the potential to lose painful amounts of money meant for our later years. We can not control how the markets fluctuate, but we can use life insurance as described earlier to protect us regardless of the upticks and downturns on Wall Street.
The last thing any of us want to do is reach retirement and not find ourselves laying on a beach chair somewhere in the Caribbean without a care in the world (or maybe that’s just me?). Whatever your retirement goals may be, life insurance can help you achieve them not only before but also during your retirement years. Plan out your retirement goals and incorporate life insurance into them to make sure you and your loved ones are taken care of regardless of what happens.
Just something to think about the next time you’re fantasizing over a piña colada.