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July 25, 2020 8:30 am
In retirement, if one spouse passes away, how do you keep the surviving spouse’s income whole? Hans and Robby answer this question and go over how life insurance for the surviving spouse can fill the gap in your retirement income plan.
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You're listening to the Truth Network and TruthNetwork.com. Welcome to finishing well brought to you by Cardinal guy, certified financial planner belonged to child best-selling author and financial planner helping families finish well over 40 years finishing well will examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Medicare IRA long-term care life insurance and investments and taxes. Now let's get started. Finishing well, finishing well today we are going deeper yet, where no man your today subject actually on finishing well survive planner home child is completely whole life insurance and today show top is actually under the seven were ecstatic Cardinal guy.com under retirement income and so what would that have to do with completely whole in life insurance is that you know this idea of if one of the two that are in retirement pathway.
First, know how do we keep the other one completely whole and by that not just pay for the funeral expenses. What are those kind of things but for sure. Hans taught me everything I know right you one of these Social Security checks is gone away.
The smaller check. It is going to go away at an you perhaps you know that that spouse is also working outside the home in our collecting and people working in retirement and a lot of people working to renew people that are working in retirement.
Some of them give the money away some and give to their grandkids, but a lot of resplendent and reliant on it's all of a sudden gone. So what are wonderful and I mean this very sincerely, with our wonderful Christian audience that we have been for those of you who may be turning from the very first time in you know the sending station for you and always we read the Scriptures like God gave us this instruction manual on how to deal with life here and if if you just read it wants to bet you notice that he mentions at least 50 times actually 53 in the King James version of the Old Testament widow.
Why did God say that in the word widow in Hebrew means desolate, whether it's by the way, when you were or widow you know that here's a person that that finds himself desolate. To some extent, and so what were to hope today is help us all in the idea of planning that although you know we can't make somebody whole in all senses of the word financially know there. This is an opportunity for completely whole life insurance right on you so last week we talked about the minimum amount from my perspective that a retired person needs of life insurance in the figure. I came up with which is $25,000 and so in that $25,000 is going to be gone pretty much in a few months after you pass away just taking care of your last expenses in providing a little bit income so what were talking about this week is, why would you need more than $25,000 of calling whole life insurance what is called whole life insurance and whole life means just that it's enforced for your whole life, which means when you die, it's actually getting paid to a beneficiary as opposed to term insurance which after certain point while you folks there listening have term insurance and you have an expiration date or it might be term insurance at your work and when you leave work itself with and so were not talking about that on the show were talking about having a minimum of $25,000 worth of life insurance for the rest of your life whether you die in your 70s 80s 90s 100. If you know you die in your 60s. It means that your family is going to need this money to take care your last expenses to make the whole thing easier on them so you know the topic at today's show is is that will why would you need more than that and I'm thinking that the easiest place with this comes up is with a married couple. There's going to be a loss of household income just with the Social Security checks when the first one dies look at my situation really I can do some Gartner is my foster detective. I went on seven is going to be sorrowing around 34 $500. However, in all my life because you know we are blessed that she didn't work outside the home.
All that much during our marriage or personal security checkpoint below, seven, 800 right and so when were both alive will be get into checks that at the point in time that were not she still don't lose your right $900 a month income and it's got one plus and I when I make the radio station and in all the sudden she's not all, amen real quick and the same is true in reverse cake but it's even more so with you going first in your you're a bit older than her. So really what we wanted to start thinking about is the loss of income or the loss of household income, and this is mostly applicable to a married couple and at the very least, the smaller Social Security check needs to be insured for 5 to 10 years so that the that the person will have some buffer where they'll they'll have something to fall back on where they've lost that check, no pensions, a lot of them are going to go away or they're going cut in half if there is pension set up out of an IRA or an income plan is all kinds of reasons why there's going to be a household income loss, and it's basically a retirement income loss and the need to ensure it is going to go well at any rate, you know, in other words, like in your situation, your wife is really going to be in a pickle if you pass away suddenly and even if that's 10 years now. Some of this stuff we can consider offering you term insurance would want to get the cost down, and the downside to that is you know so so so so you bought a 20 year term right now and 64 will then you'd be sure to lady for approximately that's can be less expensive if you bought $100,000.20 year term that it would be to buy $100,000 guaranteed universal life that Cisco be in effect, no matter how long the term insurance is can be less expensive. But the downside is that you just can have that number of 84.
Both you and your wife are you just you going to know that when you get to 84. Some applicants you know and and so it it I'm always reluctant to do that.
Especially if you get a 10 year term with that is one way to solve the problem or with partial term but were really talking about today are some reasons that a person would be more need more than $25,000 of permanent insurance and a great story with) your book on the mean Benjamin and my book is become a good friend and I meta-meta-at a financial seminar that I was doing for AARP as a volunteer site. He came up to me after the seminar, nieces, you know PES's problem and so I just told me about. He said that he has two military pensions that have no survivor benefits and the equal about 2000 a month and by the year prior. He had started saving those every month and was going to continue saving them because he had also built a new house is 77 years old and at 75. He built a new house. It's all on one level really like a lot there still there now and you take out a mortgage of 100 and 2000 3000 40,000 somewhere in that department, and he was just really concerned that if he dies his wife like a bill pay the mortgage, you have to move out of the house.
He was asking me what can I invest this money and I sat and thought about an innocent well it was like a matter that much which invested in you want to put in some safe kisses for window which is gonna limit our returns. The more center thing is it what you really need is life insurance. This sounds like a and he looked to be so I can get life insurance. I'm too old and I've got health condition, and so I kept talking to him and going over the investments and later in the conversation.
I suggest some positive news earlier you told me that you you can't get life insurance for Eunice. It was puzzling is it on the life insurance guy here. You were telling me that I just setup and he yeah anyhow.
He ended up buying $100,000 life insurance policy at 77 years old and to boot. He had type II diabetes pretty well controlled skies in good shape is a captain in the Army is over Vietnam's only logical sure is tough guy and he's also got them some problems with the rhythm of his heart. He has a pacemaker plan and he put those things together and 77 years old, you gonna start believing.
Maybe he was right, but I knew that I had 100 insurance companies at my disposal. I just know insurance companies. We can we can find one injury and I did and he got rated quite a bit. He still took the policy. It was at 77 years old is 5500 bucks a year for hundred thousand with the life insurance saving 2000, Monsanto right here when the problem right and so he like that right off the bat to resend the application to the physical and then I came back and they said okay so now the rates can be 9200 year but the good news is he getting the insurance and so when I looked into it a little bit more and the only kept that rating on there for five years or the highest part of the rating and went down that's actually been a couple years ago the five years rep and like 7500 a year.
So he's put some serious jack into this policy, we almost lost them a couple years ago he had a really is in the hospital for about a month and I was just thinking about all that but nonetheless these were the happiest guys that I know and he's just had peace of mind that you know that those pensions are paying for this life insurance are paying a lot more than just life insurance and EE. His wife is can be just fine if he dies before she, and so it just is funny how we always end up on we end up at 100,000 so I'm in a just I go through so many clients and then it seems like the clients over that we jumped like 1/2 a million or a million.
I have good people with very large policies that written on them as well but it just it seems like people either by a smaller policy like 2515 or 10 in their buying something to take care of their final expenses and that if they really want to get something that's going to provide some income for the survivors. It seems like we jumped 200 and a lot of them end up buying 100 sent today show is on retirement income. You'll find it seven worst habit Cardinal guide.com don't forget the Cardinal guide.com Cardinal guide to living retirement on the book you email him you might've guessed Mama Holland life insurance, not Hans and I would love to take our show on the road to your church and Sunday school Christian or civic group. Here's a chance for you to advance the kingdom through financial resources and leveraging Hahn's expertise and qualified charitable contributions veterans aid and attendance and IRA Social Security and a care and long-term care. Just go to Cardinal guide.com and contact Tom to schedule a live recording of finishing well at your church Christian or civic group. Contact Tom to Cardinal guide.com Cardinal guide.com welcome back to finishing well certified financial planner Hans Schild with Cardinal guide.com and today show is completely whole life insurance you now get in to the concept of you know God's want to make sure that nobody is at this lady doesn't want Windows and and and orphans. And in those kind of things and so you know what from a financial planning standpoint. Can we kind of put in place so we don't end up there and insist it. It takes a little shift in thinking and when I'm when you start buying insurance when you're in your mid-to-late 50s 60s 70s you need to be talking whole life insurance because it just it. That's what that's what you need to be purchasing and the other stories we told in the first part of the show we are talking about the hundred thousand dollars with a life insurance where were putting in 25,000 for final expenses and then leaving another $75,000 in the last forever, but you can divide that up anyway wanted to provide a nice cushion or a person for a widow or widower to compensate for the loss of income because on after the death of one spouse's so we meet weekly talked about your situation a bit and you know it just seems like a lot of these cases end up at 100,000 cousin hundred thousand dollars is a pretty significant amount of money and it is also with the life insurance or some life insurance companies that want cell's policy smaller than 100,000 so that's looked upon as a small policy to them yet you're in the category where you can go to a lot of these companies and you can get some competitive rates. Or we can do some competitive shopping for people depending upon their situation and it know hundred thousand dollars provide some pretty substantial money is sky like an easy number to go to My own situation when I did the math and went okay. Up until I actually become eligible for social security because Tammy's.
She says she's eight years younger than me. I say she 70 respected area, but it it's about seven Avenue years difference between the deal with spent on who your aspect so you know if if I were to die prior to me being 70 know this is going to put a completely different shift on her because she won't be eligible till she's even 60 ED even get any kind of Social Security right. If I were to pass away. So then you got the whole in order to make her whole.
She needs to be able to have the income I'm currently making with true broadcasting so that in my case just based on the affordability of my health situation would mean a term policy to help me through to the 870. However, after a 70. If I were to pass she's gonna lose that second so security check which is about $900 $800 month really and when you look at that over that eight years difference in our life that ends up being with my final expenses being 25,000 and you do the math. Guess what you end up at the hundred thousand sure so were talking about whole life insurance here because you know when people buy term insurance really abided 30 years old is what you need a body by half $1 million is very inexpensive and then you start have little kids and then by the time the 20 years or up in the term insurance. Your kids are grown and out of school or you just renew it when you're in your 40s for another 10 years or another 20 years and just, they bought a need life insurance.
When I get older and you might not need as much but you gonna need life insurance and then whether somebody is gonna suffer a loss of income, sudden loss of income and hardship because your death that can happen even if you're not working from the Social Security chakra pension going down a going away. That's where life insurance comes in and just close the gap and it needs to be whole life and permanent insurance.
If you're paying on something I just had too many clients that they are bought these from somebody else and I meet him on the tail end some of my soul, myself, or they buy these 20 year term policies when they're in their late 50s or their 60s and this just it's awful and on the back end of that deal where you know I have a friend of mine who's a retired airline pilot.
Just look at the guys in great shape but he's got some real serious health condition so much that he got turned down this hundred thousand dollars policy that we sent in because of his health conditions okay and is like 76 years old when the 20 years was up and he took a higher pension with no spousal benefits Thompson there with his wife and him he dies. There is pension stop suspensions pretty good sized so what we ended up doing was stacking these final expense policies. We found some companies that were taken even with the health conditions that he was outside the window or whatever we can do a lot and so we stacked up these by the resulting three policies to add up to $100,000. He was thrilled. Expand the premium out of the large pension and that she's happy everybody's happy. But that's really a result of somebody selling term insurance in his 50s and Sam will worry about that 20 years from now. He's reached his 20 years. He couldn't bind more insurance or more standard insurance we got them some substandard insurance song, rambling here, but when you have some people just last week I had a new you know these are just regular people. He's a machinist. She works in the hospital. I don't think she's a nurse, but she has.
I know that my friend and client is was her boss for many years. He recommended me. I'm sitting with these folks. Just meeting them for the first time we get everything out. I have run the Social Security statements and there to be just fine as they have saved very effectively in their 401(k)s.
They both were. The whole time and we found a $2000 Social Security check even taken early for him $2000 Social Security check for her and then you know we looked pulling out 2000 a month out of their IRAs, which they got almost about 900,000 in their IRAs.
These folks are in great shape and then they got little bit of extra savings, but that's pretty much yeah and you know in the massive could you live on $6000 month in their sample. That's kind of tough because there you know they basically have 10,000 a month now because their combined income hundred $20,000 PageMaker and 60 lesson will your 6000 a month in retirement is going to be tax-free or very low tax, because the Social Security is taxed by your other income and they're only going to have 2000 a month, their IRAs and have a $24,000 annual income they will pay much tax on and they'll pay almost no tax on the Social Security so I just equated just on a napkin that 6000 a month low tax or no tax is really equivalent to 10,000 a month paying all the taxes we are working so poor they started like this and talked about some things we can do to grow the rest of the IRA money that were not pulling out but you know I asked him about life insurance and message.
Note that there are some problems in this plan is when the first one of you dies gone is 2000 month and if that happens early in retirement and the other one lives on for a long time that's devastating and Juergen are really have to start draining these IRAs and you can have a higher tax rate so we talked about that and I just just seems like both of them are going to need to buy larger life insurance was not huge, but they're gonna need 100,000 of whole life. Each absolutely and there's other options. Actors sure there single pay 10 pay in all these are all things it did all that and that this is really no like you're working you anticipate working another 10 years within a 10 pay policy might be attracted to you on any of the stuff you do just knowing that you can pay this thing off over 10 years. Sure you pay a higher premium, but you don't have to look into your India income ensures your if you live to a ripe old age.
I mean, people have done dumber things in their old age than lapse in life insurance policies that that's also that's that's just the problem is is that if you got a plan to still be paying premiums on your life insurance policy when you're 91 9293 year when your kids might be paying your bills for you make the decision that this is worth what you Ms. THINK so. 10 pay would be an option to just get the whole thing set up and pay it off while you're still of sound mind in a way you're still working there single pay for people that have assets in Oslo problem with an IRA because if we rented to a single pay hundred thousand probably have to pull out 4050 grand. Either IRA and that if we did that we have to pull out the money to pay the taxes. But there's an infinite number of options I can tell you this, it isn't going to matter what type of life insurance you if it's enforced when you die, your family just can get a check for the amount that's on the face of the policy and some financially desolate will be part of the equation, but as you said before people, so I don't need life insurance on to skip the money on the bank and we talked about in last album I think is worth mentioning again like wow you know you can pay up life insurance policy for $84,000 or thereabouts that we did the math on you know what is. I was in their 80s somebody in their 60s can pay off $100,000 life insurance policy with about 50,000. So if they have the money sitting in the bank. You know in savings and they could afford to tie it up the rest of their life. You could just pay 50,000 and you immediately have $100,000 tax-free death benefit of someone else's go you are, you know it and return it isn't. And if that's the plan.
You have to make sure that somebody is investment you have the money.
It seems like you know like there's no way the stock markets, the fact that her interest rates and inflation while inflation some we write more insurance, more life insurance on people in their 60s and you know we get a lot of people that are smart enough that are still in their 50s. You know you buy the stuff in your 50s and you just do a 10 pay thing you know then you can just have it all taken care of and paid up by the time you get there early retirement. I have completely whole life insurance today on finishing well again it's brought to you by Cardinal guide.com don't forget the guide after card all that information, including the seven were established. We talked about retirement income today and in the course which connects the taxes and so many different things that you might need a whole book the complete know complete know the complete Cardinal guide to planning for and living in retirement by certified financial planner Hans, thank you, thank you. We hope you enjoyed finishing well brought you by Cardinal guide.com visit Cardinal guide.com for free downloads of the show previous shows on topics such as Social Security, Medicare and IRAs, long-term care and life insurance, investments and taxes as well as cons best-selling book, the complete Cardinal guide to planning for and living in retirement and the workbook once again for dozens of free resources past shows when you get Hans book go to Cardinal guide.com if you have a question, comment or suggestion for future shows. Click on the finishing well radio show on the website and send us a word.
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