How life insurance fits into a retirement plan


Congratulations, you have reached your golden age! Or maybe they’re just on the horizon. Either way, the end of the work age marks a critical time for reviewing finances and understanding how to make sure your money is working the best for you.

This process includes examining your investments, home equity, and other assets to determine if they will be able to support you for what could be a decades-long retirement. Near retirees often overlook the role life insurance can play in retirement planning.

Retirement is a major life event that could potentially change your life insurance needs. Answer these questions to decide if you have appropriate coverage for this next stage of your life.

Is your life insurance linked to your employer?

More than half of American consumers have work life insurance. Once you stop working, you may no longer have access to this employer benefit. Not all retirees need life insurance, but if you want or need a policy, it’s worth considering your options.

Some plans allow you to convert your group coverage to an individual plan, even if you no longer have access to subsidized premiums. If this option interests you, it is important to contact the insurer within 30 days of your departure. Plus, this might be a good opportunity to shop around for another life insurance policy designed to meet your current and future life insurance needs.

Have your debt levels, dependents or other priorities changed?

Many consumers purchase life insurance to provide financial protection for young family members, often choosing a policy that can help survivors pay off a mortgage or cover future school bills. Decades later, the mortgage can be paid off (or almost), and the kids are long out of school.

If you were also successful in building your wealth during this time, with 401 (k) contributions and other savings, or received an inheritance, you may no longer think you need to purchase the insurance. that you originally purchased. If you have a term life insurance policy that has been underwritten for a specific period of time (10, 20, or 30 years), this might be the time to review both the amount of coverage and the remaining term of the coverage. police. On the other hand, if you have incurred additional debt or are concerned that your surviving loved ones may have financial difficulties after your death, it may be a good idea to keep an existing policy. Additionally, if you have purchased a policy with an accumulated cash value, you may be pleasantly surprised at the many ways that this policy can be of benefit to your retirement.

Either way, now is a great time to review what you have and how you might be able to use the features of the existing coverage and policy for your retirement.

How will the bonuses fit into your retirement budget?

One of the adjustments that many new retirees face is learning to live on a fixed income, making sure they don’t overspend in the early years, but also doing their best to take advantage of the nest egg. that they have spent their lives forming. If you and your financial professional have decided that life insurance is right for you, it’s important to make sure you factor your premium payments into your retirement budget.

We also see many retirees from full-time jobs or careers pursuing some form of work or income-generating activity. Nearly half of Americans between the ages of 60 and 75 say they plan to work part-time after retiring from full-time employment, according to an AAG survey. This can also be factored into your budget considerations.

Viewing your life insurance premiums as a need rather than a desire and budgeting accordingly can ensure your policy stays in place when you or your family need it. Some policies offer the option of using the cash value of the policy to pay the premiums, which means you no longer have to make payments out of pocket.

Are you worried about outliving your money?

Longer lifespans and earlier retirements can extend the retirement period to three decades or more. As health care costs continue to rise, it’s no wonder that fear of running out of money in retirement is one of Americans’ top financial fears. Despite still strong investment markets, volatility issues are common, especially in times like retirement, when you are likely dipping into invested assets. The right life insurance policy can create an additional tax-deferred accumulation option that can be accessed as an additional emergency fund in retirement or as a source of additional income.

A permanent life insurance policy can create cash value that you can use or borrow if you need the cash. And if acquired early, it can also be a tax-deferred way to save for retirement. This might make sense for people who have already maximized traditional pension plans. Life insurance policies offer some flexibility that 401 (k) and IRAs do not, including no minimum distribution required, and can often have minimum guarantees.

In addition, some insurers are now offering life insurance policies that include additional functionality to help pay for long-term care and other medical expenses, one of the biggest expenses retirees face.

Is leaving a legacy important to you?

Sharing your time and creating memories with your family is one way to leave a legacy for them after you are gone, but some people also want to leave a financial legacy to loved ones or a charity close to their hearts. Life insurance can help you achieve this, by providing funds that can go directly to your beneficiaries, usually tax-free and without probate.

Having life insurance in place to take care of your wealth goals can give you more freedom to spend your assets while you’re alive.

While the primary goal of life insurance may be to keep your loved ones safe, it’s important to understand the role it can play in retirement planning as well. You may never use your life insurance in your golden years, but knowing it’s there can give you extra peace of mind, especially in these uncertain times.

Life insurance is issued by the Prudential Insurance Company of America and its subsidiaries in Newark, NJ. All are Prudential Financial companies and each is solely responsible for its own financial situation and contractual obligations.
This material is provided for informational or educational purposes only and does not take into account the investment objectives or financial condition of any client or potential client. The information is not intended as investment advice and does not constitute a recommendation on the management or investment of your retirement savings. If you would like information on your particular investment needs, please contact a financial professional.

President of Prudential Individual Life Insurance, Prudential Financial

Salene Hitchcock-Gear is President of Prudential Individual Life Insurance. She represents Prudential as a Director on the Advisory Board of the Women Presidents Organization and also sits on the Board of Directors of the American College of Financial Services. In addition, Hitchcock-Gear holds a bachelor’s degree from the University of Michigan, a Juris Doctor from New York University Law School, as well as FINRA Series 7 and 24 Securities Licenses. She is a member of the New York State Bar Association.


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