<p>A 20 year level premium term policy for $3 mil for a 60 year old male will run $20-40K per year depending on the company and the person’s health.</p>
<p>After 20 years, the renewal rate for this policy would probably be ridiculously expensive, especially if health problems have crept up. If could even be renewed…</p>
<p>Which is the problem with term… after the term runs out you may be un-insurable at any price.</p>
<p>ETA: The quote engine I used would not quote longer than a 20 year level premium for a 60 year old.</p>
<p>As mentioned, RMDs start at 70-1/2 and all distributions and withdrawals from 401(k) and IRA accounts = taxable income during that year. </p>
<p>After the death of the IRA account owner, RMD during the year of death is the same as what the owner was required to withdraw that year. </p>
<p>If the IRA owner was > 70-1/2 and already taking RMDs, the new owners (inheritors) of the IRA are required to continue taking RMDs starting the calendar after death, but at smaller amounts because of their longer life expectancies. Those distributions are also taxable income to them, of course, but at their marginal tax rates in effect. They would not owe tax on the owner’s “deferred taxes” because the IRA is still “intact.” Only distributions out of the IRA are taxable. I hope that was clearly explained. Inherited RAs are complicated. That’s why I think it’s so important to make sure that the beneficiary provisions are well-considered, valid and keep up to date with life changes (marriage, divorce, births and death and impending death). </p>
<p>A more accurate comparison might be a 1.5 mil policy for both husband and wife, since the 3 mil isn’t until both people die. Glad you aren’t thinking the insurance option any more, worrytoomuch, as you can see, none of us can bear the thought of wasting that much money. And though the advisor may not sell insurance, I’ll bet he’d be happy to direct you to someone who does…there is too much money in that deal not to be suspicious.</p>
<p>If the money isn’t needed until both people die, I think a survivorship policy, which doesn’t pay until the second person dies, would be cheaper than two individual policies that added up to the same benefit value.</p>
<p>I also have to chime in about not buying permanent, whole life, or any kind of life insurance outside of term insurance (especially at that cost!)</p>
<p>If you can find a great LTC insurance policy that is affordable with some good coverage - that may vary state-by-state on what is available to purchase in your state. We have that in place (bought it years ago). You may have medical conditions that make you ineligible or cost of premiums may be high. Important to obtain LTC ins ‘before the opportunity closes due to health issues’. I look at it just like home owner’s - you hope never to use it, but if needed, it is great to have. High probability to use if you live a long time - two of more activities of daily living need to be compromised for policy to be used.</p>
<p>Typically if you read enough of Suze Orman, Dave Ramsey, and others - they don’t always ‘agree’. Ed Slotts is geared at saving tax-wise; our financial advisor is a member of Ed Slotts’, but never advised us to buy more life insurance. Dave Ramsey says not to buy LTC ins until age 60 - I disagree - I bought before my cancer (cancer at age 52).</p>
<p>I did purchase more term life ins on my H - at two different times; I was looking to replace one policy, but it was higher cost to replace. Now getting term ins for two kids. I have about $300K in life ins on myself - not eligible any more because I am a cancer survivor.</p>
<p>The tax savings with converting funds into Roth IRAs is beneficial if you have some years to have the funds grow - as your withdrawals will be w/o tax on the fund gains. You paid your taxes on the money ‘up front’.</p>
<p>Some people are having to cash flow college. The earlier you can save for retirement, often funds can grow. Lots to consider in the whole process.</p>
<p>Also I totally am against reverse mortgages - high fees. Rip off. I think both Suze and Dave are against too.</p>
<p>Stay away from anything advertised heavily on TV. Many are OOS and therefore your state insurance commission can do nothing about.</p>
<p>a single permanent life is a lot cheaper than insured both spouses separately. </p>
<p>The adviser did not do the referral. It was totally up to us to decide. He has been our adviser for many years.</p>
<p>When my brother passed away, his term life payout ended up giving us time to sell his businesses and gave all of his employees a great severance package. We also had time to negotiate with the new owners regarding keeping most of his employees on the payroll. So much stress, so many lives involved.</p>
<p>I still need to decide when to cash out of all my insurance policies. I have both term and whole life. I will be 57 in January. My wife will need income if I die but she will receive my pension which cover the majority of the bills… She will not get to keep my health care though. I also have other retirement savings which she could use to pay off the mortgage so the pension would cover all of her expenses if that is what she wanted to do.</p>
<p>If I cash out the whole life I could use the funds to pay down some of the mortgage, payoff some minor bills and get rid of a monthly bill. I really cannot decide what to do.</p>
<p>@tom1944, why wouldn’t your wife be covered under the health care plan, since she is the beneficiary of your pension benefits as a retiree and isn’t health care part of the benefits? If that’s the case, children under 26 will also lose their health care coverage too (for those who have children)? Are you retired?</p>
<p>My retirement plan provides healthcare for the retiree and their dependents but only during the period the retiree is living. My wife can buy the plan under Cobra if I die first. There are some government plans that cover the spouse even if the retiree dies but that is not for NJ State employees.</p>
<p>This is a terrible time to get a reverse mortgage. You will be locked in a very low interest rate for years especially when interest rates are just on the verge of going up. The govt cannot keep spending to keep these rates artificial. It’s better to sell and take the money. </p>
<p>“The tax savings with converting funds into Roth IRAs is beneficial if you have some years to have the funds grow - as your withdrawals will be w/o tax on the fund gains. You paid your taxes on the money ‘up front’” </p>
<p>To me simplistically it seems it would a wash either way (pay now or pay later)… unless you think that tax rates will increase. But DH and I would like to look at some examples to learn more. Any good links? </p>
<p>Aside on LTC policies. Make sure to have it arranged so that the agency will notify a person of your choice should payments stop for any reason. Or have automatic payments. DH had a family member who quit paying premiums when in her mid 80’s after many many years of payments. No one in the family knew she quit paying. Turns out she was quickly getting forgetful, and within a year had to go into a nursing home. DH called the insurance company who explained that her non-payment “grace period” had run out, and there was nothing they could do. They said they called her and tried to get her to continue payments, but she decided against it (yeah…right…). </p>
<p>“To me simplistically it seems it would a wash either way (pay now or pay later)… unless you think that tax rates will increase. But DH and I would like to look at some examples to learn more. Any good links?”</p>
<p>No link, but a good personal example, I may have said it a couple of times on this thread already. We have a friend who took a small amount of money (less than 20K), and has had a return of about 18%/year over the last 17 years for us. Amazing return. We converted it to a Roth about 3-4 years ago, sucked it up and paid about 45K in taxes. Painful. But when we converted it, it was worth maybe 140K or so, and is now worth about 340K. Tax free. If he keeps this rate going, it will be worth over 9 million in 20 years. Tax free. Okay, I admit, that is unlikely for anyone to get such a good return for so long, but still…</p>
<p>My point is, if the account you convert has a very good return, it may be extremely beneficial to do a conversion as soon as possible, particularly if the market is down. If it has a very low return, not such a great deal.</p>
<p>I agree with @kjofkw - I used to be licensed to sell LTC ins - and the ins policy training had the multiple notification as part of the set up of the policy for the reason stated (about stopping payment on policy). </p>
<p>I imagine H’s rather sizable term insurance policy - if we stopped paying, the annual policy, they would have benefited from all those premiums paid. I doubt that I would get a second notification or that it would be required ‘by law’.</p>
<p>The article sited in post #4147 has several excellent points including “One needs to keep a cash-value policy at least 20 years to amortize the acquisition costs and produce a decent investment” says James Hunt, and actuary at the Consumer Federation of America, an advocacy group. The article also states mutual insurance recommendation, and lists the four biggest. H and I actually have a fair amount of combination ‘whole life element’ with one of these four - but we have had the policies since we took them out beginning in 1980 and the last taken out in 1996. Most have enough ‘paid up’ with dividends, that we no longer pay premiums on all except the very last ones which will have enough generating div’ds in the next year or two. Have never priced TIAA-CREF insurance to know if that offers good ‘value’, and you may need to be in an employment situation to benefit from a TIAA-CREF product.</p>
<p>There is a lot written about reverse mortgages - including such high fees that eat up so much of the benefit from the concept. Also the interest rate situation as pointed out in post #4152. Do you notice how many bad products are on TV advertisements? They have high paid spokespersons on these products so you trust that it is good because XXX endorses it.</p>
<p>We plan to use Roth savings ‘last’ - that way we can benefit from years and years of tax free growth (capital gains - increase is not taxable in Roth). Yes, it may be a moot point if you don’t have the growth time. Taxes have to be paid now or later. Maybe one is better able to pay the taxes later - however for some of us, a little belt tightening now for the gains over the years and later benefit.</p>
<p>No cash value on term insurance - just the decision to keep paying on it - if it is level term insurance, perhaps you can find room in your budget to continue @tom1944 .If your whole life policies are paid up by dividends, you may find it financially better to keep. However it sounds like you are wanting to retire early and find a way to ‘afford to’. Very tricky.</p>
<p>I will not retire until 62 at the earliest. I just do not like to keep paying for the insurance if I do not really need it. Deciding if I need it is the hard part.</p>
<p>As for the whole life- I would not have purchased it however my family situation made the purchase of these policies okay for reasons that do not apply to any other family so I will not discuss them.</p>
<p>@colorado_mom - take at look at this, which was originally posted by @newjersey17 back in July. It’s a little bit heavy reading, but it makes the case that for most people they are better off without a Roth. It has to do with effective vs. incremental tax rates:</p>
But if you hadn’t converted you could have invested that 45K that you paid in taxes and be making the same 18% return. And the original account would be making the same return whether it was in a Roth or a regular IRA.</p>
<p>If you are going to spend the Roth in retirement and don’t have it for estate planning purposes, the implied tax rate of every dollar withdrawn from the Roth would have to be higher than your incremental tax rate now of your contributions for a Roth to make sense. Since most of us will have less income in retirement than we have now, the tax write-off now is worth more.</p>
<p>Aside from a few years of backdoor Roths, we hadn’t really done Roths much in the past. I am not interested in doing conversions; no great reason not to, just not my thing. </p>
<p>Until IRS Notice 2014-54 permitting simultaneous rollovers of contributions and earnings.
My wife’s 401k allows after-tax contributions (not a Roth 401k). She is over 55, so her contributions plus company match come to $27k per year, leaving $52-27=$25k of post-tax space in her 401k. Technically the IRS bulletin doesn’t apply until 1/1/15, but they’ve acknowledged that you can start now. My wife already had some post-tax contributions of ~70k and earnings on that contribution of ~150k from many years ago. In the old days, taking out the 70k would have resulted in a taxable event on the 150k, but thank you IRS, now we can do a simultaneous rollover of the 70 to a Roth IRA and the 150 to a tIRA. After that, rollover the 25 and its (minimal) earnings the same way. Next year, rinse and repeat another 25. The rollovers have to be practically simultaneous (ie, you have to request them at the same time, as a twinned rollover, but if the funds don’t actually transfer on the same day does not matter). </p>
<p>I would not do this if we hadn’t maxed out our tax-advantaged space. We have roughly equal amounts in taxable and tax-deferred accounts. Unless I figure out how to move the tIRA into another vehicle (maybe back to the 401k?), this is probably the end of the backdoor Roth, but this is a lot more money into Roth annually than the backdoor method allowed. Wheeee! :)</p>
