Like many important life transitions, retirement comes with a host of emotional and financial changes. Though you may have a lot of other things on your mind when you retire, you don’t want to make these common mistakes that can cost you money (and peace of mind).
Dropping Your Life Insurance Too Soon
When you make the switch to retirement, you may discover that you need to make some changes to your life insurance strategies. If you have substantial savings and don’t expect to need to support children or other members of your family after your death, you may decide that you don’t need to keep your current life insurance policy. However, don’t drop that policy without asking questions like:
- Is my family adequately protected in the event of my death?
- Will I be able to qualify for life insurance again if my situation changes?
- Is there any residual cash value that will affect my taxes?
Keeping Low Homeowners and Auto Insurance Deductibles
To avoid getting hit with a large bill when the unexpected strikes, many people choose homeowners and auto policies with low deductibles. However, if you have adequate savings, you may be better off raising your deductible by self-insuring and pocketing what you save on premiums. Once you know what your annual premiums would be with lower deductibles, consult an independent insurance expert who can compare rates across multiple insurance companies to help you get the best deal.
Failing To Get An Insurance Checkup
Retirement is a key point in life where getting an insurance checkup is a wise idea. Most people don’t think about insurance very often and changes in variables like age, occupation, marital status, and health situation can all drastically affect the cost of insurance and the types of coverage you’ll need. A qualified insurance expert can help you understand how insurance fits into your overall financial picture and analyze your insurance needs in light of the changes retirement and aging will bring. A comprehensive insurance checkup should help you answer questions like:
- Do I have the right life insurance strategy for my family’s financial needs?
- Do I have enough of a financial safety net?
- Am I carrying enough insurance to protect my financial assets?
- Am I carrying too much or unnecessary insurance?
- Have I taken advantage of all discounts or cost saving opportunities?
- How will I pay for healthcare in retirement?