If you're like most people, you probably don't take the time to routinely evaluate your life insurance needs. Why might that be a mistake? Well, your life insurance needs change as circumstances in your life change. That's why it's a good idea to re-examine your life insurance needs at least every few years and certainly when big changes, or life events, occur.
Just about any life event you can imagine will have an impact on your life insurance needs. An obvious example is having a child. As you bring a new person into the world, you also bring a major financial responsibility into your life. If something happens to you, where's the money going to come from to help provide the kind of upbringing you want your child to have?
This section will explore the major life events that might trigger the need to re-evaluate your life insurance coverage. Our Life Insurance Needs Calculator is a great resource for seeing how changes in your life, like having a child, taking on a bigger mortgage or getting a raise, might impact your life insurance needs. Once you have a general sense of your needs, you should consider giving us a call so we can assist you in conducting a more thorough analysis of your needs and help tailor a plan that meets your specific financial objectives.
Driving away from the reception in a blue convertible with balloons flapping in the wind, you're headed for a bright future. Together, you both dream of a nice home, a good education for the kids and a comfortable retirement.
Enjoy these early carefree days, but make sure you talk to an insurance professional sometime soon, now that you're financially dependent on one another. As a married couple, you share a life together, but you also share each other's financial obligations.
What if one of you were to die tomorrow? Would the surviving spouse have enough money to pay for your final expenses, eliminate debts such as credit-card balances and car loans, and buy some time to be able to adjust to a new way of life? Life insurance can help ensure that these financial goals will be met in the tragic event that one of you were to die prematurely.
When you finish signing that huge check, your realtor hands you the keys to the cutest little Victorian three-bedroom you've ever seen. Mortgage payments are a little daunting. Now, it's time to make sure you've thought ahead.
What if the worst were to happen? Could your spouse manage the mortgage payments without you? What about monthly maintenance, utilities and unforeseen repairs ¨ not to mention property taxes? How long would your spouse have before your dream house is back up for sale?
If tragedy were to strike, turning over the keys to the family home to the bank is probably the last thing you'd want to have happen to your loved ones. Having adequate life insurance coverage can help keep the family you love in the home they love.
Congratulations on your new position or your big raise. You may not realize it, but when your income rises, your spending tends to rise too. If something were to happen to you, you'd probably want your family to be able to maintain their new and improved lifestyle. That's why it makes a lot of sense to re-assess your life insurance coverage whenever your income rises.
If you determine that you need additional coverage, the first thing you'll want to do is find out if your life insurance benefit through work (assuming, of course, that you have such a benefit) has increased along with your compensation. Many group plans will tie life insurance benefits to your annual income. So if you get a $5,000 raise and your company's life insurance plan will pay two times your income if you die, then your death benefit will increase by $10,000.
If you feel that's not enough, many employers will give you the option to increase your coverage, often through a payroll deduction. Determining whether to take advantage of this option usually depends on your age and health status. How so? With most group plans, employees are offered the same premium as others in their general age bracket (e.g., 25-34 year olds), regardless of their health status or actual age. So if you're healthy or near the lower end of your age bracket, this one-size-fits-all premium may be higher than what you would find if you shopped around on your own. On the other hand, if you're an older employee or perhaps suffer from a chronic health condition, increasing your coverage through work might be a great option because you might not be able to find a policy on the open market that's as affordable as what your employer is offering.
It's time to start thinking about whether to wallpaper the extra bedroom in pink or blue - your child is on the way. With your growing family, you're probably doing all you can to save and invest for the future. But is that enough?
You have big plans for your kids and want to see them realize their hopes and dreams. It's hard enough to make that happen with you in the picture. But what if you or your spouse - or both of you - were suddenly out of the picture? From diapers to diplomas, would there be enough income to pay for day care, a college education, and everything in between?
Your children are your greatest responsibility, and life insurance can help them to grow up in a stable environment, one in which they are physically safe and financially secure, if something were to happen to you.
With college costs continuing to skyrocket, you need to plan earlier and more carefully than ever to achieve your college-savings goals. Meeting this challenge requires a disciplined approach to saving and investing. But having a smart investment strategy is just one part of a sound college-funding plan. You also need a smart risk management strategy to ensure that your college savings goals will be achieved, even if you're not able to complete them due to illness, accident or death.
Saving and Investing for College. Federal- and state-sponsored college-savings programs are increasing in popularity because they let you save and withdraw tax-free. Education IRAs, now called Coverdell Education Savings Accounts, let you contribute $2,000 annually per child, but phase out contributions at higher income levels. Section 529 plans, a more flexible option, permit much larger contributions (over $200,000 per beneficiary in most states), and generally have no income restrictions.
Permanent life insurance is another option to consider because it, too, allows you to save and withdraw tax-free, while also providing the protection you should be building into your college savings plan (see below). Withdrawals, and loans, which are also subject to interest charges, can lower the ultimate death benefit. Because of the insurance component, your costs may be somewhat higher than with, say, a Section 529 plan.
Protecting Your College-Savings Plan. Protection products form the foundation of a sound college-funding program, ensuring that your college-savings plan won't die or become disabled if you do. Life insurance can complete a college-savings program that hasn't matured, while disability insurance can help make sure that you can continue to set aside money for college, even if you're unable to work for a period of time.
Remember, a college-funding plan without insurance is just a savings and investment program that can die or become disabled when you do.
Mention "retirement planning" and most people think about their 401(k)s, IRAs or mutual funds. Keep saving, invest those savings wisely, get to age 65 and voila! You're set for retirement.
Maybe. But what if things don't work out exactly the way you planned? What if you die prematurely or become disabled? What will happen to those people in your life, especially your spouse, who may be depending on your retirement savings to help support them well into old age? A retirement plan without insurance is just a savings and investment program that dies or becomes disabled when you do.
Below are three ways life insurance can help you meet important retirement planning objectives:
Prevent your retirement plans from dying when you do. If you die before retirement, your survivors would miss out on both your salary for living expenses and the money you were setting aside for the future. People who die prematurely haven't had as much time to put together an investment program that can really pay off. If you have sufficient life insurance, it can help pay your family's expenses and may still be there for your spouse's retirement.
Supplement your retirement income. Suppose your circumstances change and you no longer have anyone who would need the proceeds of a death benefit. With a permanent life insurance contract, you have the flexibility to surrender the policy and supplement your retirement income with the funds that have accumulated in the policy's cash value account.
Preserve your estate assets for your survivors. If you've accumulated a large estate, life insurance can help foot the estate tax bill from Uncle Sam, preserving assets for your heirs. Or, if your estate is more modest, life insurance can provide a legacy for your children and grandchildren even if you use up most of your assets during your retirement years.
If you divorce, it is critical that you own an insurance policy on your ex-husband. You do not want your child support payments to die when he does. If you currently have insurance on each other, you need to address who owns those policies. The owner of the policy will ensure the premiums are paid and control the beneficiaries, therefore, you need to be the owner.
When you were growing up, your parents made lots of sacrifices for you. They did all they could to provide for your basic needs, and then some. And they probably did so without ever thinking that they'd need to rely on your financial support later in life. But that's not always the way things work out.
Today, many people find themselves having to support their aging parents ¨ financially and otherwise. If you're one of them, you need to think about what would happen to them if something happened to you. Would your parents be able to afford quality healthcare and a decent place to live? Would they have to turn to friends or other family members for financial support?
By figuring your parents financial needs into your life insurance plans, you can take the guesswork out of what would happen to your parents if something were to happen to you.
As women we have come a long way baby.
We have worked hard to earn our independence. Those who came before us made great sacrifices that we may reap the benefits. Now it is our turn to “take action” to take a stand for what is next. The final frontier – Finances.
We define financial independence as woman who is secure in her knowledge of money. A woman who is responsible with her money. She lives within her means so she is not trapped by money. A woman who is financially independent has money that would allow her to leave a bad marriage, an abusive boyfriend, an intolerable job, or simply embark on a new adventure, like retirement. She knows how much it costs her to live on a monthly or yearly basis and she lives within their means. She has dignity money which means she has a retirement account she is contributing to on a regular basis so she knows she will be comfortable throughout her life. And last but not least she has money to give away. Money to support the causes and the organizations she is most passionate about.
If you work for a company that offers a pension plan or 401K, invest as much as you can afford. If you don't have any type of retirement at your place of employment, put aside money each payday and don't touch it.
The Internet is full of information that you can use to educate yourself. The more you know, the better prepared you are to take control of your retirement.
Make sure you need something before you buy it and above all, don't go into debt deeper than you can afford to be. Learn to budget your money and control your spending.
One of the most important things for a happy retirement is good health.
10 Things To Know
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While everyone should make long-term plans for retirement, women may want to pay special attention to when and how much they save for their later years. Because more than half the workforce is now female, retirement planning is no longer a male-only responsibility. In fact, 95% of all women in America will ultimately bear sole responsibility for their finances. Why? Women live longer than men. According to the Department of Labor, Bureau of Labor Statistics, US Census Data, women on average can expect to live 19 years in retirement while men can expect to live 15 years. Consequently, women end up needing to accumulate more income to carry them through their retirement years.
Although they may need more retirement income, women often start saving later and more cautiously than men do. A study done by the Investment Company Institute shows the average age of a first-time mutual fund buyer is 43 for men and 47 for women. Women also tend to be more "cautious" investors than men and often make more conservative investment choices. The end result is that many women are left with fewer resources to draw upon in retirement.
After 20 Years
After 30 Years
*Assumptions: The investment yields 12% per year; figures are calculated to allow for an average 4% inflation rate per year.
This chart illustrates what setting even a small amount aside can do. If you added this amount on a monthly basis to your retirement savings account, along with your regular contribution to your retirement plan, you'd benefit from even greater compounding and tax deferral.
Seventy-two percent of adult women now work outside the home, versus 29% in 1955.
- U.S. Census Bureau
Female-headed families have increased 125% since 1960.
- U.S. Census Bureau, National Center for Health Statistics
Among the elderly poor, 75% are women; 80% were not poor before they were widowed.
- US Census Bureau, Business & Professional Women's Foundation
Eighty percent of retired women have no pension benefits.
- US Census Bureau, Business & Professional Women's Foundation
Nearly 50% of women claim to lack the time, money, and expertise necessary to successfully invest for retirement. They also significantly trail men in investments.
- Dreyfus/NCWRR study, 1998
Women often put off financial planning because they do not have thousands of dollars to invest. That's especially true of women making less than $25,000 a year— which accounts for 75% of the female work force.
- Southworth Advisory Corp.
Women's retirement benefits often are lower because women typically earn less than men over an entire career. The median income for full-time working women under 65 is $24,899; for men it is $33,321. For many homemakers, divorce or the death of a spouse leaves them financially strapped.
- Women's Institute for a Secure Retirement, WISER
While 80% of men die married, 80% of women die single. Older divorced women or widows without personal savings find their income drastically slashed by the loss of a spouse. Only 21% of women receive survivor income based on their husbands' pensions. The average elderly widow receives only 40% of the Social Security benefits of a married couple.
- Women's Institute for a Secure Retirement, WISER
The U.S. has the lowest savings rate of all industrialized nations; only half of those who work actually save. A Merrill Lynch study showed that only 26% of women were saving for their future, while 29% were saving for their children's education, 27% were buying cars or making home improvements, and 9% were saving for a vacation. The rest weren't saving for anything.
- Merrill Lynch
After 15 Years