As insurance brokers we hear this all the time “I’ll invest the money instead of paying premiums for insurance.”
For every $1,000 of monthly retirement income you want to generate from your own savings, you will need about $230,000 in assets, according to the Schwab Center for Investment Research.
For example, if you want $3,000 a month, or $36,000 a year, you would need savings of $690,000. That’s a conservative estimate, assuming that you earn 5.2% on your investments and live off the earnings without dipping into the principal.
For $6,000 a month you will need at least $1.3 million. Then there’s living expenses for spouse and family, maybe another $4,000 a month. You will then need over $2 million.
A $3,000 a month benefit policy might cost $1,000-$3,000 a year for the premium, depending on age, health and other benefit options chosen. The $3,000 a month benfit policy would include inflation protection that would increase the monthly benefit to $4,000 a month ($48,000/yr) in ten years.
Where Do You Want Your Estate To Go?
Jonathan Pond, award winning financial planner, says that 90% of estates are spent this way:
1) Nursing Home
Insure or not. If you have $2+ million you can pay for long term care yourself, but then you don’t self-insure health, car, dental, or homeowners insurance.