How Life Insurance Can Help With Your Retirement Planning

How Life Insurance Can Help With Your Retirement PlanningMost people think of life insurance as something that only matters when you’re older or when you are close to death. That’s not quite true. Life insurance is an important policy to have no matter your age, many people don’t know how life insurance can be an essential part of retirement planning. It plays an important role in any financial plan by helping loved ones recover from financial burdens and unexpected costs, increasing their chances of reaching long-term goals.

Having adequate Connecticut Life Insurance coverage during and leading up to retirement will accomplish multiple things. Learn about strategic ways to utilize life insurance as part of a comprehensive retirement plan.

Protect Your Income  

Life insurance must be the foundation of a retirement plan if your family is depending on your retirement income. When a spouse passes away, the surviving spouse often struggles to meet their income needs. While expenses might be lower, the drop in expenses rarely offsets the drop in income. Life insurance can be used to ensure that there is enough money to replace losses; so the surviving spouse is able to maintain their current standard of living.

Keep Retirement Savings on Track

Most couples find themselves playing catch-up on their savings in the 10 year prior to retirement. During this period, if one spouse dies, the surviving spouse could end up being severely short on retirement savings.

Consider a 10-15 year term life insurance policy on both spouses prior to retirement in order to protect the retirement savings plan. This term policy could be very affordable, so it will not place a huge financial burden on the couple. However, you may want a policy that can be converted into a permanent policy in case a future life insurance need arises.

Improve Investment Assets

Individuals need safe investments and assets in their retirement income portfolio. Position life insurance as a substitute for bonds. Currently bonds have very little upside with very high risk. Consider a whole life policy as a bond substitute for some or all of their bond portfolios. The life insurance policy can provide similar returns without the interest rate risk of a bond.

Tax Management

There are great uses of life insurance in a retirement income plan due to the preferential tax treatment that life insurance receives.

Life insurance can provide tax-deferred growth, tax-free cash flow, and a tax-free death benefit. The tax-preferential treatment provided to life insurance allows greater flexibility and may provide a non-correlated asset to the portfolio providing additional diversification. With rapidly changing tax rates, life insurance can also help fight against future tax rate hikes.

For those considering Connecticut life insurance, sooner is better than later.  Unfortunately, many people ignore the need for life insurance until some mortality event suddenly occurs.

Major life events such as marriage, moving or buying a home, having a child, changing jobs, and retiring could signal the need for changes to a financial plan. Life insurance should be an important component to future planning.

Life insurance provides tremendous protection and benefits throughout retirement, so determine your life insurance needs before it’s too late.

About Byrnes Agency

At Byrnes Agency, we offer auto insurance solutions that can be tailored to meet your specific needs. Whether you have an old classic car or a brand-new model, we have the right coverage for you. To learn more about our products, contact us today at one of our two locations.

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Dayville Office

Phone: (860) 774-8549

394 Lake Rd

Dayville, CT 06241

United States

Hours of Operation: Monday- Friday 9:00am-5:00pm

Norwich Office

Phone: (860) 886-5498

6 Consumers Avenue

Norwich, CT 06360

United States

Hours of Operation: Monday- Friday 9:00am-5:00pm

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