Life Insurance Late in Life?

After using the online SS calculator, I put the results in ESP. We changed from my spouse taking SS at 66 and me taking at 70 to both taking at 70 with my wife taking spousal at 67. We plan to retire in 2015 and I am 7 years older than my wife. The result added ~$500/year in available consumption however it added ~15 years of recommended life insurance for me from age 72 to age 87. I plan to live to 90. What could be driving the progtram to recommend this?


dan royer's picture

Curious: how much life insurance? I might have thought this would raise discretionary spending a bit more, but if I'm thinking correctly, you added three or four years of spousal benefit, plus you added the premium to the lifetime benefits for your wife, right (she went from benefits at 66 to 70). Given your age, wouldn't it be better for you to file/suspend and her to begin spousal benefits at FAR? (whatever Maximize said is correct however).

It's hard for me to say in the abstract like this, but consider that some of this household discretionary spending must be contingent on you being alive and taking the benefit when you do.

I can ask Mike since he knows the SS rules and might intuit this better than me.

dan royer's picture

I asked Mike and wrote:

His question can’t really be answered without his database.

My guess is that by deferring SS he has to tap his investments to bridge over the delay.

He replaces that investment with SS income later, but SS is an annuity that gets reduced at his death even with widow’s benefits for his wife.

So, life insurance is required to make up for this reduction.

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