The average amount of time an American’s savings will last after the death of a spouse or partner can vary depending on the amount of income you need to replace, and more importantly, the amount of expenses you need to cover in the absence of your loved one. Generally speaking, many people expect their savings to last up to ten years without any additional income from employment or other sources.
When we look at savings and how long a family could survive in the absence of a spouse or partner, it’s important to note that the average savings balance in the United States is it is important to note that the average savings balance for those ages 35 – 44 is only $27,910.
That may not seem too bad, but if you consider that the average income in the U.S. is $70,748/yr, you may surprised to hear that according to the U.S. Census Bureau, the average savings will only last a few months.
It’s natural for some to think, “Well I will just use my 401k or retirement accounts” if the unexpected were to happen.
Average Retirement Savings
According to Nerd Wallet, the average retirement account balance for those ages 35 – 44 is $131,950. While this is better there are a few things to consider;
- That’s less than 2 years of lost income, even if you add the average savings balance to it, it’s barely over 2 years of income replacement.
- You will still have to pay for final expenses such as funeral costs, debt reduction, and more so you can expect the average savings and retirement account combined to last less than 2 year.
To ensure a more secure financial future after the loss of a spouse or loved one, having an appropriate amount of life insurance coverage in place prior to death in crucial. This will help provide additional funds for medical and funeral expenses, as well as replace lost income.
In addition, many surviving family members are forced to make some necessary changes.
- Change careers
- Go back to school for additional education
- Downsize their home
- and more to attempt to just help sustain their lifestyle, and it’s not easy to manage a family, more education, career change, and more during such a stressful time.
Term Life Insurance Should Replace Lost Savings
You may not realize that for a 35 year old in great health living in Colorado can expect to pay $17 – $29 per month for $700,000 of 10 year term insurance. Others states are likely to be in the same price range.
This is far less than 1% of the annual average income and would provide your family 10 years of income in your absence at the same average income. That may seem surprising to you that it’s so inexpensive, be most people overestimate the cost of life insurance by more than 300%.
Ultimately, it is impossible to predict how long your savings will last following the death of a spouse or partner without considering all factors at play. Therefore, making sure your family is protected with adequate life insurance coverage provides them at the worst case, time to make smart decisions to allow your family to thrive, and the financial resources to help make that a reality. There’s nothing worse than forcing your family to make life-altering, family-altering decisions during their worst time of stress and need when there is a way to provide the runway to success.