Empty Nesters Shouldn’t Say Good Bye to Their Life Insurance

The kids are all grown; finally, it’s just the two of you. You are now considered empty nesters. Your life is changing, and you are deciding what pieces of your former lifestyle should remain the same and what should be altered. You will choose to let go of some items, but make sure your existing life insurance coverage isn’t one of them.

You ask why you need insurance at this time in your life. Here are ten reasons:

Financial Goals

• To accomplish financial goals – If your children are financially dependent on you because they are still in college, life insurance can help fund their education even if you aren’t around. Remember that Social Security benefits for a surviving spouse and children cease when students finish high school.

Dependent Care

• To care for dependents – Life insurance will continue to provide for your parents and disabled adult children if you die before they do.

Social Security Blackout

• To buffer you from the Social Security “blackout period,” – Social Security pays no benefits from when the youngest child leaves high school until the surviving spouse applies for retirement benefits. This period is called the “blackout period,” It can cause extreme financial hardship to the surviving spouse if there is no income stream. Life insurance provides much-needed income.

Retirement Savings

• To supplement lost retirement savings – If a spouse died before retirement, they didn’t earn salary increases that might have increased employer pension benefits and/or IRA contributions. A life insurance policy can help make up for these losses too.

Commitments

• To meet commitments made at a time when there were two incomes – Financial commitments like mortgages or loans are based on the combined income of a two-paycheck couple. If each spouse has life insurance, the survivor can continue to meet those commitments.

Final Expenses

• To pay for unexpected expenses – Funeral and burial costs, final medical expenses, estate administration, and estate taxes aren’t always anticipated. Life insurance prepares you for these costs no matter when they happen.

Emergency Fund

• To create a financial emergency fund – If a family doesn’t have an emergency fund equivalent to at least six months of income, they could be highly vulnerable if one of the wage earners dies. This lack of funds could also impact the family’s ability to obtain credit. Life insurance can be the family’s emergency fund.

Lost Income

• To supplement lost income if a spouse dies after beginning Social Security benefits – Each spouse receives a check for his or her Social Security retirement benefits. The earner with the more significant pre-retirement income gets a benefit based on that income. The spouse with the smaller or no pre-retirement income gets a benefit based on their earnings or half of their spouse’s Social Security benefit, whichever is greater. When one spouse dies, the more considerable retirement benefit continues, but the smaller one stops. Life insurance can make up for this income loss.

Charity Donations

• To provide for charitable causes – If you want to ensure your favorite charities get money after your death, you can designate some or all of your life insurance benefits to this purpose.

Being empty nesters is just another chapter in your life. It’s a time to enjoy life and anxiously await grandchildren.