Remaining bug in ESPlannerBasic life insurance suggestions?
What I have concluded is that the Basic version (at least) does not calculate life insurance correctly in situations in which credit constraints make it so that the standard of living cannot be fully smoothed over the lifetime (either in the actual results or in a survivor scenario).
I was getting recommendations of 0 life insurance that seemed counterintuitive but which I accepted at first. Then I tried to explicitly run a survivor scenario by setting up a new profile in which the spouse is single (and social security survivor benefits for her + kids are entered as other income). I could have gotten some details of the SS wrong and I realize that taxes on those benefits will be treated differently and so on, but my make-shift survivor scenario provided such a dramatically lower standard of living that I became convinced that life insurance is called for on the order of $300K in the scenario I was examining.
Could someone confirm whether this is a bug or else explain where my reasoning about the survivor scenario of the main earner's death goes wrong--that is, explain why zero life insurance is really the right answer? Here are the inputs that were resulting in zero life insurance:
"Me" born in 1981
Spouse born in 1983
Four kids born in: 2012, 2015, 2017, 2020
"My" earnings constant at $71,700, spouse remain constant at $29,500
5% return on regular assets, with $12,000 initially
6% return on retirement accounts, with 12,000 in my and 20,000 in her Individual IRA.
1700 employer contribution for me, 800 for her. (1200 employee contribution for her, none for me.)
No reserve fund.
House value: $210K, mortgage remaining: $155K, years remaining: 28, monthly payment: $796, annual property tax: $5880, insurance: $125, expenses: $1200
College expenses of $20,000 per year for 2030-33, 2033-36, 2035-38, and 2037-40.
Other expenses of $2000/year for 2016-2019.
Any feedback or assistance is most appreciated. I have spent many hours stuck on this..