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Retirement is supposed to be a time of rest and relaxation, but the opposite may occur if you’re worried about making ends meet. Covering basic living expenses is challenging for many retired people, which is why it’s crucial for you to understand all your options. This guide explains common income streams and how life insurance can be used to support you after you retire. 

Determining How Much You Need to Retire

There are many different methods used to calculate how much money you’ll need during retirement. In general, a person should have at least 70% of their pre-retirement income available. However, retirees with travel plans or those that have advanced medical needs may require more than this figure allows.

In this case, the 4% rule can be helpful. Calculate your estimated living expenses after you stop working and divide this number by 4%. For instance, if you estimate you’ll need $40,000 a year to get by after retirement, you should have at least $1,000,000 available. 

Common Income Streams for Retirees

life insuranceSavings are an essential aspect of your retirement income. Most people keep their savings in an employer-provided 401(k) or an IRA, which uses pre-taxed money from your wages to build your retirement nest egg. When you begin to make withdrawals during retirement, this money will be taxed like regular income. 

In addition to retirement savings, many retirees receive Social Security benefits. These are based on the money you earned during the course of your life, taking the 35 years during which you earned the most and calculating an average figure.

How Life Insurance Can Supplement Your Income

Whole life is a type of permanent life insurance that remains active as long as you continue to pay the premiums. Whole life insurance doesn’t just pay a death benefit when you die, which is the case with term life (provided you die within the term stated in the policy). These life insurance policies also accrue a cash value, which you can access while you’re still alive to cover expenses.

Cash value from a life insurance policy can be used for many different purposes. This includes repairs to your home, medical expenses, or an extended trip or vacation. Money can be withdrawn in one lump sum, or it can be accessed incrementally as the need arises. Just be careful with how much money you’re withdrawing, as it can deduct funds from the death benefit intended for your family. 

 

Life insurance can be complex, which is why working with a skilled and knowledgeable insurance agent is so important. Nicole Gumm Groseclose Insurance Solutions offers life insurance coverage suited to the needs of their clients. They can also help with retirement planning, so you can head into your golden years with confidence. They’re also known throughout Clifton Forge, VA, for affording clients quality customer service. Call (540) 968-1569 to get started on your quote or visit the website to learn more. 

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