​Looking to cut costs in retirement? That could be a wise idea. If you’re like many retirees, you’ll need to make do on a fixed income stream. You may need to make spending cuts so your savings and income last for life.

One of the expenses you may be looking to cut is your life insurance premiums. Many people buy life insurance to replace their income, especially if they’re the primary breadwinner for a spouse and children. If your children are grown and you’re retired, you may feel like it doesn’t make sense to continue paying for life insurance.
 
Life insurance isn’t just for income replacement, though. It can be a versatile retirement income that can serve a wide range of needs and goals. Below are a few reasons why a permanent life insurance policy could still make sense for you, even if you’re retired and don’t have dependent children in the home:

Support for Your Surviving Spouse
 
If you’re married, there’s a chance at least one of you could live in retirement for several decades. The Society of Actuaries estimates that a married 65-year-old couple has a 50 percent chance of at least one spouse living to age 94 and a 25 percent chance of one spouse living to 98.1 If you retire in your mid-60s, there’s a real possibility that at least one of you will have a 30-year retirement.
 
You may think you have enough assets to last that long, especially when you consider other resources such as Social Security and pension benefits. However, keep in mind that you may face costly health care challenges in the final years of your life. You could spend hundreds of thousands of dollars on long-term care and nursing care. That could deplete the assets available for your surviving spouse.
 
A permanent life insurance policy can provide a tax-free benefit to your spouse after your death. Your spouse can use those funds to pay any outstanding bills and as income during the remaining years of his or her retirement.

Liquidity for Your Estate
 
Many estates face probate, which is the legal process of settling or finalizing an estate before assets are distributed to heirs. Probate can include asset appraisals, tax filings, notification of heirs and possibly even legal challenges. Depending on the size and complexity of your estate, your heirs may need to hire lawyers, accountants, realtors and others.
 
As you might imagine, probate can be a lengthy and costly process. Expenses are usually deducted from the estate, reducing the amount left to your loved ones. Also, your loved ones may have to wait months before they receive their inheritance.
 
Life insurance can be used as an effective tool to help these challenges. It avoids probate because it’s driven by a beneficiary designation. That means the life insurance company pays the tax-free death benefit to your beneficiaries immediately after they file a claim. Those funds could be helpful as your heirs navigate legal issues or while they wait for the estate to exit probate.

Supplemental Income
 
Life insurance isn’t just about the death benefit. Many permanent policies also have a cash value account that accumulates on a tax-deferred basis. The method of accumulation depends on the type of policy you own.

However, you can tap into this cash value as needed in retirement. You can take a tax-free loan or take a withdrawal that may be taxable depending on how much growth you’ve had. That income could be useful in the event of an emergency or if you simply need a little extra retirement cash flow.

Ready to explore your life insurance options? Let’s talk about it. Contact us today at Retirement and Wealth Solutions of Nebraska. We can help you review your goals and develop a strategy. Let’s connect soon and start the conversation.
 
1https://www.fidelity.com/viewpoints/retirement/longevity
 
This information has been provided by a Licensed Financial and Insurance Professional and does not necessarily represent the views of the presenting professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice and is not sponsored or endorsed by the Social Security Administration or any government agency.

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​Worried about how you’ll pay for long-term care in retirement? You’re not alone. Long-term care is a very real possibility for today’s retirees. According to research from the U.S. Department of Health and Human Services, 70 percent of today’s 65-year-olds will need long-term care at some point in their lives.1
 
Long-term care is often provided in an assisted living or nursing facility. However, it can also be provided in the home. Either way, it’s usually a costly service. A recent Genworth study found that a full-time home health aide cost an average of $4,000 per month in 2018. A room in an assisted living facility cost roughly the same amount.2
 
There’s no doubt that an extended need for long-term care can drain your retirement assets. Fortunately, you can minimize the risk by planning ahead. A well-developed strategy can help you identify payment options and obtain the care you need.
 
Below are a few common mistakes that many people make with their long-term care planning. Avoid these mistakes and you’ll be ahead of the curve. A financial professional can also help you develop a strategy and choose tools to help cover the cost.

Not discussing the risk with your family.
 
Your family could be your most valuable long-term care asset, especially in the early stages of needing care. Many seniors see their need for care progress over time. It often starts with help with basic chores like errands and cleaning. Over time it can progress to more intensive help with things such as bathing, mobility or even medical treatment. Every situation is different, but many seniors are able to rely on their family for assistance in the early stages.

It’s helpful to have the conversation with your spouse, children or other loved ones before you actually need care. Get an idea of how they may be able to provide help. Could they balance assistance between their own work and home responsibilities? You may discover that they won’t be as reliable as you’d expected. If that’s the case, you may want to consider alternatives.

Expecting Medicare or Medicaid to pay for your costs.
 
Many seniors rely on Medicare for health care coverage. It’s a valuable resource that covers everything from doctor’s visits to hospitalizations to many prescription drugs. Some services aren’t covered by Medicare, though, including long-term care.
 
Medicare will cover some forms of extended care if it’s related to a hospitalization for a specific illness or injury. The care must consist of skilled nursing with the goal of treating you for the condition. Custodial care with things like eating, bathing and other basic living activities may not be covered.
 
Medicaid is also a helpful resource, but you have to have little income and almost no assets to qualify for Medicaid coverage. Also, Medicaid often won’t cover care provided in the home. While Medicare and Medicaid may provide coverage in some instances, it’s not wise to count on them for complete funding. You may want to develop other funding strategies.

Failing to plan.
 
The most common planning mistake many retirees make is the failure to plan altogether. They believe that they’re too young to worry about long-term care or that they can rely on friends and family for support. Or they simply don’t want to think about the possibility of being in a facility or needing professional assistance in the home.

It’s certainly not pleasant to think about long-term care, but it’s too important to ignore. Also, the earlier you plan, the more options you may have available. You could fund a health savings account to help pay for care. Or you could purchase a long-term care insurance policy to help cover the cost. Premiums for such policies are often more affordable if you are relatively young and healthy at the time of purchase.
 
Ready to plan your long-term care strategy? Let’s talk about it. Contact us at Retirement and Wealth Solutions of Nebraska. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
 
1https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html
2https://www.genworth.com/aging-and-you/finances/cost-of-care.html
 
This information has been provided by a Licensed Financial and Insurance Professional and does not necessarily represent the views of the presenting professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice and is not sponsored or endorsed by the Social Security Administration or any government agency.

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