If You Don’t Have Enough to Retire You May Need More Life Insurance


Millions of people are moving toward retirement with nowhere near as much in retirement savings as they will need to provide for a comfortable retirement. While that creates an obvious dilemma for anyone who really wants to retire at the normal age, it also opens up other financial needs.

One concern is life insurance. The less money to have saved for retirement, the more life insurance you will likely need. There are several reasons why this is true.

Making sure your spouse will be OK after you’re gone

If you have a large retirement nest egg, your spouse will be well provided for in the event of your death. If it is large enough, you may not even need life insurance – your spouse will do just fine with the assets that you have jointly accumulated during your lifetimes.

But if you have little or no retirement savings, your death could leave your spouse in a very difficult financial position. If it is hard to survive for the two of you, it will be substantially more difficult for your spouse after you’re gone.

A large life insurance policy can provide financial stability to your surviving spouse that you were unable to achieve during your lifetime. It will represent a one-time opportunity to provide a financial windfall that may enable your spouse to live with dignity in the event of your death.

Final expenses and medical bills hit harder when you have less money

Everyone will have final expenses, and typically at least some remaining medical bills when they die. If you have a lot of retirement savings, your spouse can probably handle this quite easily. But if investment worth is in short supply, the cost of final expenses and lingering medical bills can have a severe negative impact.

It’s even possible – if there are enough medical bills – that your spouse could be in a bankruptcy situation in the event of your death. Whatever financial resources that you now have could easily be consumed by the avalanche of bills.

In the absence of a sufficient amount of retirement assets or other investments, a life insurance policy is the best way to provide for this potential need. It will represent your last chance to keep your spouse from suffering a catastrophic financial crisis as a result of your death.

Replacing your income when you’re gone

If you don’t have a significant amount of retirement assets, it is highly likely that you’ll be maintaining some form of income earning activity during your retirement years. Many people do this as a way to offset the lack of investment- or retirement-income that would enable them to enjoy a full-time retirement.

If you have to rely on a substantial amount of earned income, or believe that you will in retirement, you’ll need some method of replacing lost wages just the way you did during your earlier working years. Your spouse, and maybe even one of your children and grandchildren, may be dependent upon your income. Life insurance will replace those lost wages in the event of your death.

You may want extra money to leave to your heirs

Just because you don’t have a lot of money saved doesn’t mean that you don’t want to pass something on to leave to your children. If you have very little saved, life insurance represents your best opportunity to do this.

You can take a life insurance policy that is large enough to pay for your final expenses, provide direct support for your spouse, and some extra to leave for your children.

Not many people think in terms of life insurance in connection with retirement. If you are entering retirement with insufficient assets, you may want to give it serious consideration as a Plan B, to provide for what you were unable to do through traditional investments.