How life insurance can fit into a retirement planning strategy
Life insurance may play a bigger role in a retirement strategy than many Americans realize. Here's how.
Retirement planning often involves building a 401(k) or IRA, estimating future expenses and deciding when to start taking Social Security benefits. However, as retirement nears, protecting the financial plan becomes as crucial as adding to it. Surveys show that many Americans lack confidence in their retirement savings lasting their lifetime.
Life insurance could be a valuable component of a retirement strategy, complementing traditional retirement accounts. It can provide financial protection for a spouse if one dies, leaving behind a death benefit that's tax-free. Permanent life insurance policies like whole and universal life can build cash value over time, which policyholders can access through withdrawals or loans during retirement.
This cash value could supplement other assets in retirement, rather than selling investments in a down market. Additionally, life insurance can help preserve an inheritance by acting as a separate inheritance rather than specifically preserving a portion of an investment portfolio for heirs. However, life insurance policies come with costs and tradeoffs, so the right approach depends on the type of policy, coverage needs, and how it fits into the broader retirement plan.
Written by urgent.news from CBS News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
