Surviving In Retirement

Earlier in your life, you and your spouse planned out how you would receive your retirement income.  Imagine it looked something like this…

You were able to continue working and by doing so you were able to delay and maximize your Social Security.  So, let’s say you are making $2,750 per month from your Social Security, and your spouse is taking half of your benefit for another $1,375 per month, for a total of $49,500 per year.  You had a decent pension from your company, but unfortunately, it is not as much as you would have liked. Accordingly, to make a sustainable living, you had to maximize the payout. So you designated that the pension would be only for your lifetime.  The pension will pay you $25,000 a year for as long as you live.  Finally, the two of you were decent savers and were able to accumulate about $200,000 in savings.  When you retired, you did not want to risk your savings, so you moved them into a CD where they are earning 3%.  This pays you an annual income of $6,000 and also serves as your emergency fund.  So, in total, you make $80,500 ($33,000 + $16,500 + $25,000 + $6,000).  Well done!

With this plan, you have guaranteed income streams until you die, and have nothing at risk; great! However, what happens if the breadwinner (the spouse with the pension) passes first? 

Firstly, they will get to keep the greater of the two Social Security checks, and the CD’s.  However, because you designated your pension ‘life only’ with no continuation, that is completely gone. So, now your spouse’s income drops from $80,500 to $39,000 ($33,000 + $16,500 + $25,000 + $6,000).  Where will your spouse make up the lost $41,500? If your spouse withdraws it from your CD’s they will run out of money in a little over 4 years.  Then what would they do? 

Will your spouse be able to survive on your social security alone?  Do you want them to have to deal with the immense stress of insufficient funds after losing you?  Do you want them to have to find a new partner for money, have to go back to work, or to have to rely on your family?  What if there was a better way? 

Life insurance can be an inexpensive solution to this significant problem.  It will not only protect your spouse and make sure they are taken care of if something were to happen to you, but it will also make sure your final wishes are taken care of. Don’t leave your spouse’s livelihood to chance! For more information about how to get the life insurance you need, to protect your spouse, without reducing your current spendable income, call my office today!