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Life insurance and retirement

There are a lot of options to consider when you are planning for your retirement. There tends to be a lot of focus on more well-known retirement income options such as 401ks, IRAs and Social Security.

One important retirement income option that often gets overlooked is life insurance.

What many people may not realize, is that life insurance is essential for retirement planning.

What is life insurance?

Life insurance is insurance that pays out a sum of money either on the death of the insured person or after a set period.

The popular view is that life insurance is primarily used as financial protection to cover a family’s financial needs in the event that the main breadwinner passes early and unexpectedly.

While this is true about life insurance, there are many reasons to include life insurance in your retirement planning.

Why should you include life insurance in your retirement planning?

There are many things to consider when deciding on the best retirement options to meet your retirement goals and objectives. One retirement option that many do not tend to consider is life insurance. But there are many reasons why you may want to consider wehther a life insurance policy is a good retirement option for you.

Protect your retirement

One reason to include life insurance in your retirement plan is to protect your retirement income during retirement.

When one spouse passes away, at the minimum, the remaining spouse will lose their partners' Social Security check. Any amount of lost retirement income could be detrimental to the remaining spouse.

Life insurance makes up for any lost retirement income that comes with losing a spouse.

Keep your retirement plan on track

Another reason to include life insurance in your retirement plan is to maintain the retirement savings plan that you have in place in the event that your spouse passes away earlier than expected.

If both spouses are using their last ten years of work to aggressively save for retirement and then one of the spouses passes away, life insurance would keep the retirement savings plan on track.

Life insurance is a good alternative for bonds

Another benefit of including life insurance in your retirement plan is that they can provide the same benefits as a bond without the interest rate risk that comes with bonds.

This means that with a life insurance policy, you can receive a return of 3-5 percent without having to worry about increasing interest rates.

Beneficial tax breaks

Lastly, there are many notable tax breaks that come with investing in a life insurance plan that you may not get with other investment options. This is a great benefit during a time that tax rates are constantly changing.

This means that you get to keep more of your money in your pocket for retirement.

When is the best time to get life insurance?

The best time to purchase life insurance is going to be sooner rather than later.

Sadly, a lot of people do not consider the need for life insurance until there has already been a death and it is too late.

It is important to take a preventative approach now in order to improve your retirement and protect your retirement income.

Are there enough reasons to consider buying life insurance?

Everybody’s financial situation is going to be different, so what works for one person is not going to work for everyone.

There are also different types of life insurance that are available, meaning that each person should purchase a life insurance plan that is based on their individual retirement goals and objectives.

This is why it is important to discuss all of your options with a trusted financial advisor.

Click Here for a free consultation with a trusted local financial advisor to discuss your life insurance options for retirement today.

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