Midlife Insurance Audit

Ray’s Take Owning the right type of insurance policies at the right price at the right time of your life is a crucial element to your financial planning. Preparing for retirement is a particularly important time to do a full risk management evaluation, as you may no longer need some types of coverage you’ve had for years. You might be overpaying for others or might be inadvertently underinsured against some potential risks.

Some things to think about might include determining whether your current insurance policies can be used to help supplement retirement income. Can they be used for legacy and estate planning purposes? Can they be used to cover final expenses like outstanding medical bills, funeral and estate-settling costs, outstanding debts, mortgage balance and college costs? 

The estate and gift-tax exemption for 2017 is $5.49 million (that’s $10.98 million for a married couple), so the universe of people who need life insurance for estate taxes has gotten a bit smaller. If you haven’t self-insured your need for life insurance, you should reconsider your ability to retire.

Health insurance needs go up at this point however. That “early” retirement looks good on paper until you check on health insurance eligibility and cost until you are eligible for Medicare. Even after Medicare, many should consider supplements. The cost of long-term care must be evaluated. While many can afford to self-insure this risk, others cannot, or they have in their financial plan a desire to pass along their hard-earned wealth to their heirs.

Liability protection needs have gone up as well, since protecting your wealth has become pretty important at this point. Once you retire, you will probably not want to have to go back to work.

Dana’s Take A close friend just filed for divorce, buried her father and watched her only child move to another city. She’s feeling pretty lost, but I have faith that her midlife reboot will lead in exciting new directions. 

A midlife financial review is a great thing, but it’s not the only review we should be doing. It’s a perfect time to review all aspects of our lives. Midlife can be a stressful time, and many people feel discontented and restless as they struggle with aging and their sense of purpose in life. 

Are you where we want to be? Are you where you envisioned yourself at this point? And if not, how can you make it happen? The key to a happy fulfilled life is to have a range of goals in different areas of life, from health and fitness to money, to friends and family, to personal development. Maybe it’s time to start that hobby you’ve always dreamed of doing. Or, if you’ve already begun, take it to the next step. How about a small business that you’ll enjoy all the way into retirement, with the bonus of an additional income stream?

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