Our lives change a great deal as we age. What’s most important at twenty-five could be meaningless at sixty-five and vice versa. But what does all of this transition mean for life insurance? While us boomers have accomplished a great deal at this point, I’m sure you’re not ready to hang it up, and you’re definitely not thinking about checking out just yet. But life insurance can definitely feel unnecessary as you head into the ‘twilight years’. And once you retire money gets tighter and that monthly payment can feel less and less worth it. But what’s the responsible move? Should you have life insurance in retirement?
The first question to ask concerns dependents. In other words, do you still have family members that would be greatly impacted by your passing? Chances are your children have moved out of the house at this point, and are now financially responsible for themselves. But it is often the case that grandparents raise chgildren for family members that are deployed in the armed forces or have passed away prematurely. In that case you should definitely hang on to your life insurance. And your spouse may also be considered a dependent. Even if you are no longer working your spouse could still lose income if you pass away, in the form of slimmed down social security checks and pension payments. In either situation, hang on to that life insurance.
Life insurance can also offer value when it comes to estate planning. If you have money to leave to your family after you are gone, you’ve probably thought long and hard about how to keep that money intact. But estate taxes are a fact of life (and death) that you cannot get away from. And it seems that those taxes are poised to go up in the coming years. If you have a solid life insurance plan, it can actually be set up as a trust that can be used to help pay those hefty estate taxes.
Another reason life insurance could remain useful after retirement is for charitable donations. This could be the case if you have enough income to maintain your life insurance payments without trouble. That insurance policy could be adjusted to benefit a specific charity or a group of non-profit organizations. That way you can still make a sizable donation to a charity without having to end your life with a lump sum of money. As long as you maintain that policy for a significant amount of time, those small monthly payments will add up.
Now all of these issues are moot if you’ve waited until retirement to apply for life insurance. Chances are you will not be approved after a certain age, and you’ll definitely be turned away if you have health problems. Even if you are healthy you might find paying the premium for a policy after age fifty to be prohibitively expensive. The best bet is to get a policy during your peak earning years, and maintain it through retirement. But as you’ve read here, life insurance is only necessary at this point under some very specific conditions. If you have no dependents and aren’t worried about a significant estate or charitable donation you could probably use that money in much better ways.