life insurance for your college kids?

[Fedup]

There was no salesman for insurance, I contacted them myself.

 

[pb4uski]

Work life insurance provided free from work will pay off the house($150k)At that point expenses will be 35-45k a year including health insurance. Wife would get 5k a month from SS widows and children’s benefit. Using just 4K of that per month and saving the other 1k would have her at FI in 2yrs.
She would get the 5k benefit for at least 6 more years then it would taper off as the kids age. She would get $2300 month for life from SS based on my earnings history.
She would be set financially

You may want to double check all of that. Your definition of "set financially" and hers may be different.

Few employers provide $150,000 of life insurance free... so you either have a really generous employer or are buying additional coverage and do have life insurance.

If your PIA is $2,300/month then the maximum survivor family benefits are 150-180% of that, or $4,140/month... not $5k. Once the kids have flown the coop then she would get 75% ($1,725/month) to age 60 and then the $2,300/month after age 60.

Note.. if Congress fails to fix SS, those benefits would reduce 23% starting in 2034.

All I know is that DW's father died when she was 13 and even though her mom worked, their family struggled financially.... just make sure that your family doesn't end up struggling just because you have a hair across your a$$ about life insurance.... (and I have two BILs that sell life insurance so I know what a PITA life insurance salesmen can be).

 

[Beer-man]

You may want to double check all of that. Your definition of "set financially" and hers may be different.



Few employers provide $150,000 of life insurance free... so you either have a really generous employer or are buying additional coverage and do have life insurance.



If your PIA is $2,300/month then the maximum survivor family benefits are 150-180% of that, or $4,140/month... not $5k. Once the kids have flown the coop then she would get 75% ($1,725/month) to age 60 and then the $2,300/month after age 60.



Note.. if Congress fails to fix SS, those benefits would reduce 23% starting in 2034.



All I know is that DW's father died when she was 13 and even though her mom worked, their family struggled financially.... just make sure that your family doesn't end up struggling just because you have a hair across your a$$ about life insurance.... (and I have two BILs that sell life insurance so I know what a PITA life insurance salesmen can be).

All numbers are correct, confirmed by HR and by SS’s website.
And reducing benefits of SS by 23% is not going to happen. There are many easier and more fiscally responsible ways to shore it up before that nuclear option.
There is risk averse then there’s being scared of your own shadow.

 

[pb4uski]

Oh did you guys let the life insurance salesman scare you out of your money? I prefer to make educated decisions after getting all the information. Truth be told my wife would do so well if I die in the next few years I was almost worried to tell her....

No... though I did buy a small whole life policy when I was 22 with a $20/month premium... in part in case something happened and I became uninsurable/couldn't pass underwriting.... it has actually worked out well... if I cashed it in tomorrow my average annual return would be 4.85% and if I die tomorrow the average annual return is about 8%.

Then I learned more and became an advocate of BTID (buy term and invest the difference)... I bought affordable term life insuranceon my own directly from the insurer through a trade association.

 

[Lukeee]

Wow, that grand-daughter must be formidable if she can repel a mountain!

Ha

Teens are invincible!

 

[pb4uski]

.... If your PIA is $2,300/month then the maximum survivor family benefits are 150-180% of that, or $4,140/month... not $5k. Once the kids have flown the coop then she would get 75% ($1,725/month) to age 60 and then the $2,300/month after age 60. ...

Found this source: https://www.ssa.gov/OACT/COLA/familymax.html

For the family of a worker who becomes age 62 or dies in 2018 before attaining age 62, the total amount of benefits payable will be computed so that it does not exceed:
(a) 150 percent of the first $1,144 of the worker's PIA, plus
(b) 272 percent of the worker's PIA over $1,144 through $1,651, plus
(c) 134 percent of the worker's PIA over $1,651 through $2,154, plus
(d) 175 percent of the worker's PIA over $2,154.

So if PIA was $2,300 then maximum family benefit would be $4,475... in between the 180% and the $5k that the poster claims.

 

[pb4uski]

.... If your PIA is $2,300/month then the maximum survivor family benefits are 150-180% of that, or $4,140/month... not $5k. Once the kids have flown the coop then she would get 75% ($1,725/month) to age 60 and then the $2,300/month after age 60. ...

The previous post was based on:

There's a limit to the amount that family members can receive each month. The limit varies, but it is generally equal to between 150 and 180 percent of the basic benefit rate.

from https://www.ssa.gov/planners/survivors/ifyou.html

Later found this source: https://www.ssa.gov/OACT/COLA/familymax.html

For the family of a worker who becomes age 62 or dies in 2018 before attaining age 62, the total amount of benefits payable will be computed so that it does not exceed:
(a) 150 percent of the first $1,144 of the worker's PIA, plus
(b) 272 percent of the worker's PIA over $1,144 through $1,651, plus
(c) 134 percent of the worker's PIA over $1,651 through $2,154, plus
(d) 175 percent of the worker's PIA over $2,154.

So if PIA was $2,300 then maximum family benefit would be $4,475... in between the 180% and the $5k that the poster claims.

 

[Beer-man]

The previous post was based on:
from https://www.ssa.gov/planners/survivors/ifyou.html

Later found this source: https://www.ssa.gov/OACT/COLA/familymax.html



So if PIA was $2,300 then maximum family benefit would be $4,475... in between the 180% and the $5k that the poster claims.

I may have rounded up or down either way, but it still drives the same point that life insurance at this stage on onward is un-necessary.
As time goes on those numbers from SS will just get larger and we will just get closer to FI.
I would argue that once someone decides to pursue FI(if they are serious) doesn’t need more than 5yrs of life insurance

 

[Big_Hitter]

I may have rounded up or down either way, but it still drives the same point that life insurance at this stage on onward is un-necessary.

have you talked to a financial planner?

like someone with a CFP designation at a minimum?

 

[Beer-man]

have you talked to a financial planner?



like someone with a CFP designation at a minimum?

Why would I need to? With the facts as I stated them I don’t see the rational?

 

[pb4uski]

Is health insurance included in that $35-45k? In most parts of the country health insurance will run her $1k/month or more. What about periodic replacements of cars, roofs, HVAC etc. What about cars for the kids when they start driving? What about college for those 3 kids? What about inflation?

From what you have provided I don't see that you need a lot of life insurance, but term is cheap and $500k of term could make a huge difference for your family if you do meet up with that proverbial beer truck. I think that is all we are saying.

 

[Beer-man]

Is health insurance included in that $35-45k? In most parts of the country health insurance will run her $1k/month or more. What about periodic replacements of cars, roofs, HVAC etc. What about cars for the kids when they start driving? What about college for those 3 kids? What about inflation?

From what you have provided I don't see that you need a lot of life insurance, but term is cheap and $500k of term could make a huge difference for your family if you do meet up with that proverbial beer truck. I think that is all we are saying.

28k is budget without mortgage, 38k with insurance, 45k with all the bells and whistles a widower might need.

With the SS help covering well over that accounts could grow for 10-15yrs untouched and that’s if she decides to not work. Conservative growth estimates are used in my calculations

 

[pb4uski]

....with all the bells and whistles a widower might need. ....

Your wife is a guy? That's different from what I was thinking Beer-man meant.