What is retirement needs?
When do you need to plan for Retirement Needs?
Retirement is when everything changes. Once you’re retired, you typically don’t need disability or life insurance to replace your wages. You’ll be living off other sources of income – your savings or any pensions. In the midst of all these exciting changes, don’t overlook at your insurance coverage. With a new season of life at hand, old policies may no longer meet your needs.
The pool of funds is invested on the employee’s behalf, and the earnings on the investments generate income to the worker upon retirement.
A pension plan for your retirement needs may have you make a monthly payment of a set percentage, but the largest portion of the payment will come from your employer.
The pension plan guarantees you a certain amount of money each month once you reach retirement age.
The pension plan has both positive and negative aspects.
When you are working for the government, you may not have much choice in the type of retirement needs plan you are offered. It is very important to understand each of the specific details related to your pension plan.
Most employers out there may offer an annual seminar or workshop on the plan or go over the specific details of the plan during orientation. If you are unsure of the type of pension plan that you are getting, and whether or not the plan is funded which means money being set aside to pay you benefits later or unfunded, talk to a human resource spokesperson.
Once you understand all the aspects of the plan, then you will be able to make retirement planning decisions for you to retire comfortably.
Insurance you’ll still need in retirement
Once you’re retired, you typically don’t need disability or life insurance to replace your wages. However, you need to keep some of the policies in place even after you quit working. These include:
Liability insurance coverage pays the costs if you cause an accident like your dog bites someone or you’re otherwise found at fault for an injury. Financial planner typically recommends having liability coverage at least equal to your net worth and preferably twice of it.
The value of your home may be a significant part of your wealth and perhaps a source that you can leverage on the future to fund your retirement. But your house insurance may not offer enough protection for it. It doesn’t cover floods, for example, or earthquakes in areas at high risk for those disasters. While house insurance policies typically include wind damage, you may need separate coverage to protect against hurricanes.
Life insurance is usually used to provide financial protection for dependents reliant on your income for support. While many people do not need it as soon as the children grow up, depending on your circumstances, life insurance might have a place in your retirement planning strategy. Life insurance can provide pension replacement for a spouse or dependent who may not qualify for survivor benefits after your death.
Why You May Need Insurance in Retirement
If you do not have life insurance when you retire, here are some reasons to think twice about buying it:
Replace all or a part of your retirement plan benefits.
If your spouse relies on Social Security or retirement benefits, they may no longer be eligible for this fund if you die. The death benefits provided by life insurance can replace this lost benefit.
The death benefit of a life insurance policy may be used to pay for mortgages or other debt. Of course, it’s wonderful to be debt free in retirement, but the reality is that this does not happen to everyone. Life insurance results provide a safe and secure way to help your loved ones pay off, so they do not become responsible.
Life insurance will be paid at the time of death. So, insurance companies charge higher premiums at an older age. Therefore, premium plans in your 60s can be expensive. It may be a bad idea to invest in it.
Asset transfers to beneficiaries.
If most of your retirement income and retirement plans are invested in assets such as shares, your own property, or bank savings accounts, you may transfer the ownership of the asset to another person which provides protection income.
Cash value policy fees.
Term life insurance is straightforward, with premium ratings and death benefit set for several years. But cash value policies, such as lifelong life or variable lives, have more components (insurance plus investment portfolios), and their commissions and fees, especially in the first few years, may be higher than the term policies.
Contact our AIA Life Planning Advisor to get in touch with us and start your personal coverage or choose your plan now. Get covered correctly. Be advised correctly. Call today to be advised on the best insurance protection personalized for you. Or send us the form below on your interest.