How life insurance can fit into a retirement planning strategy
Summary
Life insurance can play a useful role in retirement planning by protecting a spouse's finances, providing access to cash through certain types of policies, and helping preserve an inheritance. While it should not replace traditional retirement savings like 401(k) or IRA accounts, life insurance can add flexibility and security to overall retirement strategies.Key Facts
- Only 52% of Americans feel confident their retirement savings will last their lifetime, down from 73% in 2025.
- 56% of people have updated their retirement plans, and 34% have delayed or plan to delay retirement.
- Life insurance death benefits can help a surviving spouse cover living expenses and pay off debts.
- Death benefits are usually not taxed as income by the IRS, with some exceptions.
- Permanent life insurance policies (whole or universal) build cash value that can be borrowed or withdrawn during retirement.
- Using cash value may help avoid selling investments in a bad market but can reduce the policy’s death benefit and have tax consequences.
- Life insurance can support retirement goals by providing funds for heirs without sacrificing money needed for living expenses.
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