Retirement is one of the most important milestones of your overall financial plan. Whether you’re accepting your first job offer, starting a family, or are enjoying your peak earning years, your goals for retirement play a key role in your financial strategies. How should you view and manage that plan through various life stages? Here are some points to consider.

Here are three of the most popular financial retirement planning topics we help families with every day:

Learn the Basics

Retirement is about a lot more than a 401(k). As you plan, you’ll also need to think about health, longevity, insurance, and tax considerations. Here’s where to start.

Life Insurance & Retirement

Life insurance can do a lot more than protect your loved ones. Some policy types also accrue cash value that you can use to supplement your retirement.

Permanent Life Insurance

Permanent life insurance covers you for life, unlike a term policy, which will eventually expire. It also builds cash value over time that you can use for any purpose you like.

Benefits of Retirement Planning

Piggy bank with a folded bill in the top, sitting on a notebook that says ‘retirement plan’

Why should you take the time now to think about retirement? It might not seem important since it’s so far away. If you share that feeling, you’re not alone.

But here’s the thing.

The earlier you start saving for retirement, the easier it will be. You’ll have more time to save slowly, which means less of a strain on your day-to-day finances now and less fear or uncertainty as you age. Instead of wondering, how long will my retirement savings last, you’ll know – because you made a plan and stuck to it. I don’t know about you, but that sounds like a better solution to me!

Did You Know: The median retirement savings account balance for people age 55-64: $120,000. For people 45-55: $82,600. For people 35 to 44: $37,000. (Source: PricewaterhouseCoopers)

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How Long Will Your Retirement Be?

Senior couple sitting with a retirement planner having a meeting

The first step in retirement planning is to estimate how long a retirement you’ll have, and how much income you’ll have available to you during those years. When are you planning to retire? How much longer than that does the current research suggest you’ll live? That’s the amount of time you need to keep in mind as you create your retirement savings plan.

As of 2023, the latest research says that women who reach age 65 have a 50% chance of making it to age 86.8. And a man who lives to age 65 has a 50% chance of living to age 84.2. (SSA.gov, Life Expectancy Calculator)

So if you plan to retire at age 72, for example, women should plan on living at least 14 more years. Once you have a rough number in mind, you can start to plan how much income you’ll need to have set aside for those years.

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How Much Money Will You Need?

Senior couple in front of a laptop researching permanent life insurance

Here are few questions you should ask to help you start figuring out how much retirement income you’ll need:

  • How much money do you need to live for one year now? Some of these expenses won’t be required during retirement (like childcare), but others will probably go up (like healthcare). So you can still use your current yearly expenses as a rough ballpark figure.
  • How many years do you expect to live in retirement?
  • When do you plan on taking Social Security benefits? What is your expected monthly benefit amount? (Hint: the Social Security website can tell you this)
  • What other retirement income will you have? (i.e., 401k, Roth IRA, pension, etc.) How much do you anticipate having in total? How much will it be feasible to withdraw per month to make sure these sources last the length of your retirement?

Most Americans need more retirement income than they currently expect to get from Social Security and distributions from their 401(k) or other retirement accounts. So where is that money supposed to come from?

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Want to Retire with extra Cash? Pick a Permanent Life Insurance Policy

One good source of extra retirement income is the cash value associated with a permanent life insurance policy. Of course, the #1 benefit of any permanent policy is that no matter when you pass away, your loved ones get a tax free death benefit. That’s not the case with a term life policy, for example. So a permanent policy adds a little more peace of mind to your retirement knowing your loved ones are provided for.

The second great benefit of a permanent policy is the cash value. A portion of every payment you make goes into a cash value account. Depending on the account type you choose, that money will grow based on various metrics: a flat rate of interest, a rate of interest tied to a market index, or investment choices you make. Over time, the amount of cash grows tax-deferred – it can really add up if you’ve had your policy for over a decade!

Senior woman looking at a graph showing her growing retirement savings

You can take loans or withdrawals from that cash value to supplement your retirement income.

  • Unexpected healthcare cost? Your cash value is there for you.
  • Home renovations needed? Cash value can cover that, too.
  • Bucket list family trip? It’s up to you what do with that money.
  • Regular withdrawals just to have something extra? Yes, that’s fair game, too.

In most cases, cash value is a “use it or lose it” proposition. If you don’t spend it, the insurance company will keep it when you pass away. Some insurers will give you the option to add your cash value to the death benefit, but not all of them. That means it’s money you virtually have to spend. It’s a nice cushion to have during retirement!

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A Permanent Life Insurance Policy Rounds Out Your Retirement Portfolio

Close-up shot of a man’s hands holding a phone, looking at a stock chart

When you look at your retirement portfolio, you want to have a mix of investments. Some are going to be solid and secure, like government bonds. Others may fluctuate wildly, like stocks. The idea is to balance the riskier investments with secure investments so that, over time, you get the best chances for growth without risking your entire savings.

Low-Risk Investments: High-yield savings accounts, municipal bonds, CDs, treasury bonds, money market funds, gold, I bonds, and more.

High-Risk Investments: Cryptocurrency, options, futures, penny stocks, high-yield bonds, leveraged ETFs, IPOs, and more.

So where does a permanent life insurance policy fit in?

Your cash value is a stable asset that offers balance and security, as opposed to riskier investments like stocks. Although there is one type of policy that lets you invest your cash value – and adds the risk that you could lose some of its value – most types of permanent policies offer guarantees that you won’t lose any money. It’s up to you how adventurous you want to be when you choose your policy type.

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Types of Permanent Life Insurance Policies

Agent standing in front of an easel with her retirement planning presentation

Permanent policies come in several different types. As you’ll see, there’s only one type (variable universal) that offers risk of loss due to market performance.

  • Whole life. Your cash value grows at a small but guaranteed rate of interest. It’s safe and secure, but your cash value won’t grow as much as it would with the other policy types.
  • Universal life. Your cash value grows at a small but guaranteed rate of interest. You can pay more money into the policy if you want your cash value to grow faster and have more time to compound that interest.
  • Indexed universal life. Your cash value growth is tied to the performance of a stock market index you choose. When the market does well, you earn more interest. When the market doesn’t do well, you either earn no interest or a small, guaranteed rate of interest.
  • Variable universal life. You can invest some or all of your cash value in options provided by your insurer. This gives you the chance to make greater gains, but also comes with the risk of potential loss.
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Want a Free Quote?

Schedule a call and let me give you a free quote over the phone. If you need help figuring out how much coverage you need, I can go over that, too. Let’s talk about your retirement savings plan and see if a permanent life insurance policy can help!

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