Working in Retirement Years Requires More Life Insurance


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We’ve already covered Why You May Want Life Insurance Even if You’re Retired, but there is a growing reason that stands out above all the rest: more people are working in retirement years than ever before. If you’re one of them – or think you may be – it may require more life insurance than you realize.

While everyone needs life insurance for the usual reasons – final expenses, lingering medical obligations, and payoff of debt – working requires a sufficient amount of coverage to replace lost wages. That’s an insurance need of a greater dimension.

Though we like to assume that everyone will be able to comfortably retire at 65 or whatever age they choose, there are multiple reasons why you may end up working in your retirement years.

Not Everyone Can Afford to Retire

The TV version of retirement is that everyone will be able to do it, and to do so in comfort and luxury. The reality is that many people simply cannot afford to retire. As such, they find it necessary to supplement their savings and retirement income with a job or business income.

One of the primary purposes of life insurance is covering lost wages. If you will have an income from earned sources, you’ll need to make sure that you have an adequate amount of insurance to replace those wages for the benefit of your spouse or other dependents.

“Boomerang Kids”

Did you notice in the last sentence that I used the term other dependents? That’s because these days a spouse is hardly the only dependent you may have in your retirement years.


Due to economic uncertainty and the crushing burden of student loan debt, many adult children are returning to their parents homes, looking for a better chance of moving forward in a difficult world. Sometimes they come back alone, sometimes they bring a spouse, and sometimes they bring your grandchildren.

If this is your situation, or it ever will be, you may find yourself forced to work longer than you would hope to do. Your children and grandchildren may be at least partially dependent upon your earnings for survival.

A Major Reversal in the Financial Markets

Twice since 2000, people had to rearrange their retirement plans as a result of major reversals in the financial markets. The first was the dot com bust from 2000 to 2002, the second was the financial meltdown crash from 2007 to 2009. Both declines were serious enough that people either had to delay retirement, or even to come out of retirement, to deal with suddenly lower retirement portfolios.

When financial assets decline in a major way, pursuing sources of earned income is often the only way toward recovery. A market collapse just before or during retirement could change all of your plans.

Still another investment factor almost unique to our time are very low interest rates. They’re forcing retirees to either continue maintaining positions in risky investments, or to draw down their assets in order to survive. Interest rates below one or two percent are not very conducive to a comfortable retirement.

The Cost of Living Continues to Rise Even After You Retire

Inflation is the Great Retirement X Factor – not only do we need to plan for it between now and retirement, but it remains a relentless issue even later. Rising prices won’t stop simply because you decide to retire. We see this happening with income and property taxes, utility costs, insurance costs, rents, real estate values, and gas and food prices.

Even if you have plenty of money to retire at 65, a five percent annual inflation rate will leave you with insufficient assets after just a few years. For this reason, many people are forced to continue working past the desired retirement age.

People Are Living Longer and Healthier Lives Well Into Retirement

This is actually a positive reason why people might decide to continue working in retirement. If you can fully expect to live for 20 or more years after retiring, it may not be entirely practical to plan to live off of your retirement assets for such a long period of time. Working for several more years may be the best way to avoid outliving your money.

As well, people are healthier in their retirement years today than ever before. It may be the combination of a need for more income, coupled with greater physical and mental ability to do so that drives you to continue working.

No matter what the reason is behind working during traditional retirement years, the fact that you’ll be relying on earned income will increase your need for life insurance to cover the lost wages that will result upon your death.

If this is a concern for you, contact a life insurance agent to see what your options are. Life insurance is expensive when you’re over 60, so you’ll have to balance out the need for coverage with your ability to afford it. At a minimum, make sure that you have enough life insurance to provide for your dependents for at least a period of time so they can adjust to the absence of your income.

This is a relatively recent phenomenon and it promises to be more common in the future.