H and I had a discussion with our financial advisor while we were on our road trip. He called us because he wanted to move some money around because we had done extremely well in our IRAs and other investments this past year. We are just about at the number we wanted to be at to feel comfortable in retirement.
H turns 64 later this year and doesn’t have plans to retire as of yet. He currently works for a European company that is trying to move more and more of the US work over to Europe so H doesn’t know how long this job will last. H is also working with one of his former bosses and another former coworker on a proposed new start up. H is hoping to hang on at the current company a bit longer until they can secure funding to get the start up going. I don’t mind my job as the work is not hard and the people are really nice. The one thing about still working is that we have some expensive trips we would love to take over the next couple of years prior to retiring that we can fund from our wages. It’s a great feeling to know that we are just about at the “finish line” for where we want to be!
H is finally beginning to think about retirement! It’s a miracle! Of course, it’s not for another 8-10 years…but I have run numbers and we’ll be ok when he hits 62 (three more years). He plans to work til 68-70.
I will take my SS based on my record at 62 and H will take his at 70. My intention is to pull $ from the 401k in the time between when H retires and starts SS. It will help reduce our RMDs later.
The big issue I see is that almost everything will be taxable in retirement. He has no problem with this. I’d like to build up more non-retirement funds over the next few years. The pandemic has given us a pretty good sense of expenses when we’re more hime-bound.
When are y’all dropping term life policies? H has a large policy to make sure I’m protected til Medicare kicks in, but it’s getting really expensive. My policy is smaller and still reasonable, and since I’m totally uninsurable, we’ve kept it.
H’s employer offered LTC in 2002 with open enrollment, and we grabbed it, since I was newly diagnosed with leukemia and had a pretty sobering dx at the time. Not sure what happens with rates when H retires. It hasn’t been super expensive so far, so given the above, we’ve kept it.
H has no interest in talking to a financial advisor. We remain at a standstill re: wills. He doesn’t want to divide evenly, which affects how I want to structure my will. Sigh.
Regardless of what he wants to do with his will or not, you guys need to have wills. The last thing you want is to have your estate wind up in probate and leave a mess for any heirs or your descendants.
@Hoggirl, I, too, have very strong feelings about elder care! I not only don’t want to be a burden, I also don’t want to see whatever estate I amass be used up paying some one to shower me and dress me and then spend the day in bed watching Lifetime shows! I have watched several family members, up close and personal, and have developed strong feelings about all that!
We got 30 year level premium term policies way back when the kids were little. They have 4-5 more years until the term expires, after which I suspect they will become hideously expensive to keep (10x more per year and constantly increasing). So we will most likely drop them then.
we’re doing the same. Wife had a 20 year level which they extended for two more years with no premium increase, but on year 23, they cranked up the rate and cut the benefit so we dropped it. I had a 30-year level which has a few years to go. While we don’t need it, the policy is now a good deal (relative to a similar policy purchased at this age) so we’ll let it go to term and then cancel.
If it was not a level-term, would have cancelled last year.
Our term policies go to age 70. H has been at his job long enough that I would qualify for preretirement survivor medical benefits, but I’d have to pay for it. That, plus our OOP limit, is a chunk of change.
When I turn 65, I think we can look at dropping H’s policy. Til then, it’s a lot of $.
The LTC we took had age related increases rather than an employment/retirement based scenario. That increase hit at age 60 - the financial advisor advised keeping it despite its cost - self paying for long term care is significantly more expensive.
We both took out “large” insurance policies when the kids were growing up and we had a substantial mortgage. The kids are grown and we have no mortgage, plus we can each afford to live without the policy proceeds. So when their time is up (5 more years I think) we will let them go. I’ve thought about just letting them go early, but they are not that expensive and I guess I’m a little superstitious or something.
I’m sort of in this boat as well. When my husband got divorced (2012) he had to get an insurance policy (term) where his ex wife was the beneficiary until he is 65 (he’s 62). There were some caveats in there where if certain things happened then she had the right to take over the policy. Well, that trigger occurred about 3 years ago and when given the opportunity to take over ownership of the policy she just ignored the opportunity. It is only a 600k policy and costs just over $1/year. So the question was with him being 59 years old do we just take over the policy which actually goes until 2027 because of when he bought it (so he will actually be 68 when it ends).
So when she didn’t take it over we decided to do so and pay the $1k so now he’s the owner and I’m the beneficiary. He never has to move it back to her. But I keep questioning in my mind is it worth paying the 1k a year (which is cheap) for the next 6 years or is it a waste of money to do so? My husband has basically no health issues. But like you I don’t want to jinx it.
There are also 3 other life insurance policies on him. A term that goes until he’s in his 80’s, a whole life, and another small term policy that is a few hundred a year. It may actually be worth rolling the dice to just get rid of this one but not sure I can just let it go.
I have a different view on life insurance (full disclosure I sell it as part of an overall financial plan - yes I’m an advisor). I put my money where my mouth is though and own quite a bit of it, both term and permanent. I think of permanent as part of my overall portfolio. I’m not talking about the cash value, although I have significant amounts of that which will be accessed tax free in retirement. I view the death benefit as part of retirement.
Let’s face it, unlikely you will spend every dollar during life. Of course that depends on your circumstances. So on a go forward basis, what are those premiums buying? In my case, they are buying a substantial nest egg for my spouse. One greater than an investment would likely produce. Why is that important? I assume she will outlive me. More longevity, better health, and women frequently do. So, I don’t need as much in retirement for our joint life (although we have plenty). We can focus on spending whatever and then when I pass, she gets it all over again, and then when she passes, whatever is left goes to the kids. I call this “Spend and Replace”. By doing this, I can take some stress out of the portfolio. We don’t need it to be $X and therefore invest in more aggressive stuff. Of course, very conservative on what I think we’ll need and for how long.
So you might want to convert some of that term into perm coverage just so there’s something guaranteed to replenish later. Do the numbers. What would it cost to do that? What would that investment likely be in traditional markets (of course nothing really certain there unless you go very conservative)? When derisking the portfolio, hard to beat the future death benefit, especially when you consider taxes. There are low cost guaranteed death benefit products (no focus on cash value- more like permanent term if you will - that lock in rates forever). Might make sense to have some of that in the portfolio. Worth taking a look. Every situation is different.
Unconventional thinking doesn’t make it wrong (or right).
That’s a popular opinion / decision. Nothing wrong with it. Tends to be more emotional which is fine. However, it is actually a financial instrument which makes it an asset class. I keep all asset classes on the table when providing protection and predictability in retirement planning. For me, it’s about the end game. Per situation, what are the most realistic ways to accomplish X. Just math.
(for those reading this with preconceived ideas - not about shoehorning anyone into anything. If it works, it works, if it doesn’t, it doesn’t. You’d be surprised how many businesses and high net worth folks utilize this type of planning. I just make it available to the general public. Knowing your options is pretty powerful.)
I think it is pretty disingenuous to accuse ChoatieMom of being ‘emotional’ for cancelling life insurance after her family no longer needed it to assist if they had died while their child was a minor. Her decision sounded rational and reasonable.
Life insurance shouldn’t be marketed as a ‘profit’ source for families, it should be a tool used to help if that help is needed. ChoatieMom no longer needed it, why would it be emotional to stop paying for something you don’t need?
I understand that you are a salesperson who is trying to make the product you sell sound good - that’s your job, though I would argue it is somewhat gross to have someone trying to sell on a website not meant to be a sales site. It would be better if you didn’t try to negate other people’s viewpoints because it makes your product looks as unnecessary; as those products are often unnecessary for families.
As a HNW family, I have unfortunately had a lot of salespeople try to sell the idea that life insurance is some sort of ‘great asset’. It is not. It is a tool that can be helpful when you are in a financial position that would be negatively impacted by someone’s death. If your assets are such that someone’s death would be tragic but not financially devastating - you don’t need life insurance. There are a lot of other ways to organize your finances to deal with tax implications, and most people who would need that help definitely don’t need perm life benefits.
My husband has life and disability insurance through his employer, very common. He was talking with a work friend and that friend had a co-worker who passed away from cancer the last week of February. He was to retire March 1.
My husband remarked that it was definitely sad that the co-worker had passed before he was able to retire. But then said, actually it was advantageous for his heirs. They got to collect the insurance policy.
I did not take any offense at @rickle1’s response. Our decision was not made emotionally at all. As a planning instrument, we no longer needed the insurance, and neither DH nor I see any reason to profit from the death of the other or enrich our child beyond what he is already set to inherit. Besides, all the money that would have gone to paying insurance premiums went into other investments in our portfolio that have performed as well or better than the insurance product, so kiddo will still get that payout, just in another form. Like all financial decisions, everyone needs to assess their own situation. I was just responding to the question upthread about what people decided to do about life insurance.
(Gotta love the extended timeframe for editing on this new interface. )
We dropped our term policies when our youngest graduated from high school. Not an emotional decision, just no need. We could have dropped it earlier, but left it in place for no good reason other than that had been our plan for years.
Not commenting on @ChoatieMom decision at all. Have no idea what her circumstances are / were. Also agree that insurance products should be used as a tool to provide a solution. Completely agnostic to it which gives me the benefit of actually looking at a full spectrum of solutions / alternatives. Also agnostic to traditional asset classes. In short, I could care less what things are called. I care what they do. If they work, great. If not, move on.
Not trying to sell anything to anyone, other than having an open mind I guess, Although this has nothing to do with my post, I’m a salesperson only to the extent that anyone in business is a sales person (which everyone is).
Re your personal experience, you’re entitled to your opinion. Deal with many HNW who feel the same and many who would disagree. Again, I’m agnostic. I don’t care. If it works, it works. If not, not. Big difference between needs and wants. Could make an argument that you don’t need anything other than clothing, shelter and food. Many paths to a particular outcome. Some WANT a path that includes the many benefits of life insurance. Some don’t.
More important than our different viewpoints, I’m not criticizing or belittling @ChoatieMom in any way.
@CountingDown It sounds like your DH has a lot of work identity and joy with his job that he wants to continue working. Of course between now and then, things may change but it is great that you are financially comfortable with the way the numbers are looking.
I keep paying on some term insurance for DH and will until the end of the term portion. We have some paid up insurance (premiums are paid for by the dividends) and those have both cash value and death benefits that are worth just playing out for death benefits. As we think about ‘estate planning’ we may have the beneficiaries change on these policies to children/grandchildren - we shall see. We also have term insurance on both kids, and I pay for a term policy on SIL that benefits DD (I have her as owner and beneficiary of the policy).
Originally my SS was going to be drawn under DH’s - I was SAHM for 18 years (and during that time survived aggressive stage III cancer and aggressive treatments/now cancer free over 10 years) - but returned to work 4 years ago ‘sunset career’. Now it seems my own SS will be a bit higher than drawing under DH’s. So now I think I have an option – do I draw under DH when we both retire, and then wait until age 70 to draw under my own - or is my option different? I would imagine once he draws SS my half rate of his is based on that snapshot of when he draws SS.
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