Life Insurance When Retirement Plans Fall Apart
Retirement plans assume two incomes and two lifespans. What a spouse death disrupts, and how a death benefit keeps the plan from falling apart.
Losing a spouse is one of the most difficult experiences anyone can go through. It can be emotionally and financially devastating, especially when it happens suddenly and unexpectedly. One of the biggest financial impacts of a spouse's untimely death is on the retirement plans of the surviving spouse.
What Gets Disrupted When a Spouse Dies
A few things you can expect to be adversely affected in retirement plans when a spouse dies:
- Loss of matching 401k or retirement contributions — one income disappears, and with it, any employer matching contributions
- Loss of health or other benefits — surviving spouses may lose employer-provided health insurance
- Loss of income funding other retirement plans — contributions to IRAs, brokerage accounts, and other savings vehicles stop
- Reduced Social Security income — survivor benefits may be lower than the combined benefit both spouses expected
The Retirement Gap Is Real
Studies show that widows and widowers often see a 30–50% reduction in their standard of living in the years following a spouse’s death. Life insurance is the most effective tool for closing this gap.
How Life Insurance Fills the Gap
A properly structured life insurance plan can provide the funding necessary to fill in the gap between what you wanted to do for retirement and where you are currently in your retirement savings. The death benefit can be invested to replace the lost income stream, used to pay off the mortgage, used to fund retirement accounts in the surviving spouse's name, or structured as an annuity to provide a reliable monthly income.
Plan Now, Rest Easy Later
The right life insurance plan today means your spouse will never have to choose between paying the mortgage and funding their retirement. Get covered in 10 minutes with our instant decision process.