When we think of retirement planning, often we focus only on the accumulation of cash in a tax-qualified account. But designing your insurance policies around retirement needs can be a big help in creating a reliable retirement plan that carries you through all your retirement years.
The cash values in whole (or permanent) life insurance policies can be used for tax-free loans during your retirement. Upon repayment, the loan interest goes into your cash values, which makes it a less expensive way to get a loan than through a financial institution. Loans can even be used to pay your premiums and sustain your policy. Keep in mind, however, that unpaid loans can reduce death benefits.
Life insurance is also important to a retirement plan because without a death benefit, you may be concerned about spending all of your retirement savings and leaving your spouse or other heirs with nothing after your death. Knowing that you have a life insurance death benefit allows you to spend your savings as you had planned, confident that your death benefit will be there for your heirs.
Long-term Care Insurance
If you need long-term care—whether in the home or out—a long-term care policy will ensure that your retirement savings does not take a big hit in order to pay for it. Sometimes, when we can’t independently complete a few activities of daily living, such as bathing or dressing, we need in-home help. That help is extremely expensive and can drain a retirement account. Long-term care insurance ensures that you won’t have to choose between assistance and poverty.
You may plan to have your mortgage paid off by the time you retire, but that doesn’t mean you should also plan on dropping your home insurance. Imagine a fire ruins your home and all your property after you retire. Without home insurance, you must pay for a temporary living arrangement, replace all your stuff and rebuild your home out of your retirement savings—or sell the property at a loss.
It would be almost impossible to live a comfortable retirement without any insurance coverage. Give us a call to discuss the intricacies of retirement planning with insurance and help ensure that you live out the balance of your life in comfort with as little stress as possible.