I am 60 and my wife is 62. We have no mortgage on our house and have about $600,000 in savings. I would like to retire soon and have a choice to make. I will receive $3000 a month in a pension from my union of which I can have them take $400 a month so my wife would receive half my pension if I die. My question is would I be better off to take out a term life insurance policy so she would just get a lump sum? Thanks!!
Terry Says: A lot depends on whether you are healthy enough to qualify for term life at this age. And it can be very expensive! Plus, if your wife gets a portion of your pension, it will last her entire lifetime. And she might not get good advice about investing life insurance proceeds. I vote for the pension covering your wife’s life as well as your own!
But I also think you might want to do some sophisticated modeling about how to invest that savings, and how much you can spend every year to make sure your money lasts your lifetime. You will probably also get Social Security — and I would advise not taking that until full retirement age, even if you retire now. Plus there’s the issue of Minimum Required Withdrawals if some of that savings is in retirement accounts. That would start in 10 years.
All in all, I think it is better to plan than to guess. My suggestion: Contact Vanguard and ask about their new Vanguard Personal Advisor service. It is free if you have $50,000 in investments with them, and worth moving a small amount of savings to their funds to go through this process.