Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Life Insurance and Pension
Old 02-11-2010, 07:40 PM   #1
Full time employment: Posting here.
flyfishnevada's Avatar
 
Join Date: Jan 2010
Location: Smith
Posts: 743
Life Insurance and Pension

Looking for ways to reduce spending anticipating Semi-RE this summer. I have a pension, works out to 82% of current take home with COLA. We have some modest investments, no credit card debt, could sell and pay off our vehicles and home and have a positive net worth. We also are pre-paying our kids college and if they go out of state or go beyond 4 years, its on them.

I want to cancel my life insurance. I can take an option with my pension that would reduce it to about 76% of current take home that offers my wife the full pension for her lifetime if I die. I figure thats as good or better than a policy that is costing me $40 bucks a month. I am in good health (overweight, but great cholesterol, blood pressure, etc.) and I exercise regularly and eat very well (lots of veggies, fruit, fiber, etc).

Am I missing something? I figure that the life insurance policy is just throwing money away since my wife would be able to pay all the bills and actually come out ahead (financially) if I kicked it since I wouldn't be around to eat, wear clothes, buy stuff, etc. Sure she'd get a big check if I died before her, but that could be 40 years from now. She is kind of leary, but admits it is the feeling of security she is afraid of losing, but that my logic makes sense. Figured I would ask on here and see if there is an angle were missing.
__________________

__________________
flyfishnevada is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-11-2010, 08:13 PM   #2
Thinks s/he gets paid by the post
Katsmeow's Avatar
 
Join Date: Jul 2009
Posts: 3,399
How safe is the pension?

For private companies, the pension guaranty agency has a limit on how much pension it will pay and a surviving spouse can only get 50% even if the pension plan would give the spouse 100%.

If you have a governmental pension, I'm not sure what risk is there.
__________________

__________________
Katsmeow is offline   Reply With Quote
Old 02-11-2010, 09:11 PM   #3
Thinks s/he gets paid by the post
Koolau's Avatar
 
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 3,244
Quote:
Originally Posted by flyfishnevada View Post
She is kind of leary, but admits it is the feeling of security she is afraid of losing, but that my logic makes sense.
This one should not be ignored IMO. Since none of us knows how our lives will turn out (heck, you could outlive her!) insurance has as much to do with a "feeling" of security as it does the security itself.

DW and I went the other way and kept the insurance but lowered her survivor benefit in order to get more monthly pension. We're holding off on my SS so that if I go first, her survivor benefit is higher. There may be several things to consider when you are setting this up. Suggest you run some numbers and go over them with DW. Be sure she's on board and comfortable - even if it's not quite as "sensible" to you when all is said and done.

Just my $.02 worth. As usual, YMMV. Good luck with this decision.
__________________
Ko'olau's Law -

Anything which can be used can be misused. Anything which can be misused will be.
Koolau is offline   Reply With Quote
Old 02-11-2010, 09:34 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
I prefer a belt and suspenders arrangement for these sorts of things, personally. If I am around, I can take action to fix problems. If I am pushing up daisies, I cannot do that, so a big check may be needed. So if I were in your shoes I would probably take the survivor option on the pension and keep a LI policy. But if you have had he policy for several years I would go shop it and see if you could do better on price.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 02-11-2010, 09:42 PM   #5
Moderator
Alan's Avatar
 
Join Date: Jul 2005
Location: Eee Bah Gum
Posts: 21,106
Quote:
Originally Posted by Koolau View Post
This one should not be ignored IMO. Since none of us knows how our lives will turn out (heck, you could outlive her!) insurance has as much to do with a "feeling" of security as it does the security itself.

DW and I went the other way and kept the insurance but lowered her survivor benefit in order to get more monthly pension. We're holding off on my SS so that if I go first, her survivor benefit is higher. There may be several things to consider when you are setting this up. Suggest you run some numbers and go over them with DW. Be sure she's on board and comfortable - even if it's not quite as "sensible" to you when all is said and done.

Just my $.02 worth. As usual, YMMV. Good luck with this decision.
I think the same, and am keeping the insurance and lowering the survivor option.
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Now it's adventure before dementia
Alan is online now   Reply With Quote
Old 02-11-2010, 11:22 PM   #6
Full time employment: Posting here.
flyfishnevada's Avatar
 
Join Date: Jan 2010
Location: Smith
Posts: 743
My pension is pretty safe. Nevada PERS, good assets, not a lot of unfunded liability, well rated.

I considered the keep the LI and reduce the survivor benefit. I need to pencil that out. A gamble also. If I die young, the full pension would be worth much more that the one time check. Still it may have advantages. I have the luxury of adjusting the survivor benefit to whatever I want, of course, with varying costs.

I'm leaning the no LI, full survivor benefits, but not sure yet.
__________________
flyfishnevada is offline   Reply With Quote
Old 02-12-2010, 05:24 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,619
If you die, how much SS survivors' benefits would your family receive? Children generally get a lot. Surviving non-working spouse gets quite a bit.
__________________
LOL! is offline   Reply With Quote
Old 02-12-2010, 09:13 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Moemg's Avatar
 
Join Date: Jan 2007
Location: Sarasota,fl.
Posts: 10,035
Remember that she will then only have one SS check not the two you may be used to getting at that point . Plus it really is not much cheaper when one person dies since you still have the same house expenses , car expenses and utility expenses .The food bill may drop a little but she'll probably meet a lot of widows and they love to do lunch. Plus she may need a handyman for things you took care of .
__________________
Moemg is offline   Reply With Quote
Old 02-12-2010, 09:18 PM   #9
Full time employment: Posting here.
 
Join Date: Nov 2009
Location: VA
Posts: 923
If everything works out perfectly, she may very well be better off with the pension. Of course, things change and they tend to be different than the way that you planned them. What if you end up spending down much of the assets you had saved (such as for long term care treatment)? It's a lot easier to replace that with a lump sum tax-free benefit from the life insurance than for her to wait around to get your pension money each month/year. For $40 a month, I would keep it. I am sure if you are in a financially secure position that $40/month will not make or break your life - just make sure that the premiums are guaranteed for however long you want to keep the policy. If your $40/month payment is only guaranteed for another 3 years, that's a little different than if it's guaranteed for the next 30 years.
__________________

__________________
dgoldenz is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Life Insurance summer2007 FIRE and Money 14 03-11-2009 09:53 AM
Life Insurance...What do I need? TedMunson Young Dreamers 18 09-03-2007 07:11 AM
Life Insurance... bamboogrrrl Young Dreamers 20 08-09-2007 09:45 AM
whole life insurance WM FIRE and Money 18 03-19-2007 08:35 PM
Term Life on Pension rather than Benefit options? Maneiac FIRE and Money 14 01-04-2007 04:55 PM

 

 
All times are GMT -6. The time now is 10:30 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.