Retirement Insurance

Retirement Insurance – Planning for Peace of Mind

You’re used to carrying insurance – most working adults insure their homes, cars, and themselves – but retirement insurance presents unique challenges. What you insure will change and how you provide that insurance will as well.

One of the biggest challenges around retirement insurance is that during your career most insurance decisions are made by the company employing you; in retirement, you will have to make those decisions on your own. The earlier you start planning out the kind of retirement insurance you’ll need, an how it will fit into your retirement budget, the greater your peace of mind, both before and after you retire.

What Kind of Retirement Insurance Will You Need?

When making your retirement income plan, choosing which retirement insurances you will need will be a great help in your retirement savings strategy. You’ll probably still drive and certainly still live somewhere after you retire, so automobile and home insurance policies are a given. But once you’re retired, you’re family may only need one car, which significantly cuts down your monthly premiums. Also, your annual mileage may drop significantly, which could result in a rate reduction. You should also consider driver safety courses for older drivers. AARP and AAA offer refresher safety courses and many insurance companies voluntarily, or by state law, offer reduced premiums to those who complete a state approved driver improvement course.

On the home insurance front, you may decide that you need less space, or less home maintenance, and sell your home. Renter’s insurance can be significantly less than full home insurance, further reducing your retirement insurance costs.

Retirement life insurance may also be less expensive than the life insurance you had while working. With your children grown and self-sufficient, and your spouse provided for by your retirement investments, you may want to save money by reducing your retirement life insurance policy.

There are some costs that will probably rise. Retirement health insurance can be expensive, but is a smart and necessary investment. Once you retire, the insurance you had at your job will be available, by law, for another 18 months, but after that you’ll be on your own. Begin researching retirement health insurance options now, before that 18 month clock starts ticking down.

When we reach age 65, Medicare coverage becomes available, but it will not pay for everything. So you must still consider supplementing that with additional insurance. These policies vary in cost and specifics, but they all conform to uniform coverage provisions dictated by the National Association of Insurance Commissioners.

To learn more about Medicare, read our article Understanding Medicare and your Retirement Insurance.

You may also want to consider long-term care insurance. These plans vary greatly and can be expensive, but so is nursing home care in old age — the average cost is $37,000 per year, much more than what is available by the typical retirement income. Explore long-term care coverage carefully, and remember, the younger you are at first purchase, the lower the cost. The sooner you start planning, the greater your peace of mind.