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Refine Your Insurance Strategy as an Empty Nester

Updated: Sep 26, 2023

I recently enjoyed a coffee with a close friend, Mary. She expressed immense pride in her son, Michael, who is set to graduate in May and begin his career at Amsted Industries in Chicago.

While Mary went over her plans – from assisting Michael with settling into a city apartment to converting his room into a guest room – she had a sudden realization. After two decades of parenting, she and her husband were on the brink of having the house to themselves again.

With graduation just around the corner I know many parents may be finding themselves in a similar situation. This means you’ll be reevaluating financial priorities as your next major milestone – retirement – moves into the foreseeable future.

You are probably at the height of your earning potential and fast approaching the peak of wealth accumulation. During this final stretch to retirement — and throughout your retirement period — wealth protection and insurance review is critical.

Protecting your assets might not solely be a function of your investment strategy, but could include a comprehensive insurance approach to safeguard against an array of financial risks. Review the following 5 insurances today.

retirees with the last of their children gone looking out the window of their empty nest
Your children are gone now and you've an empty nest. What's next?

Homeowner’s Insurance

Even though your mortgage may be paid off — and thus released of the lender’s requirement to have homeowners insurance — it remains important to consider coverage against property loss and exposure to personal liability.

The cost of replacing your home and the belongings contained therein may have grown over the years, making now the ideal time to review your policy coverage. Also, consider obtaining an umbrella policy, which is specifically designed to safeguard against financial risks associated with personal liability.

Health Insurance

Health care costs often represent one of the most significant expenses during retirement, as medical needs tend to increase with age. Planning for these costs is essential to ensure a comfortable and stress-free retirement.

If you plan to retire prior to age 65 when Medicare coverage is set to begin, you will need coverage to bridge the gap between when you retire and when you turn 65. If your spouse continues to work, you may want to consider getting yourself added to his or her plan, though you may need to wait until the employer’s annual enrollment period. Alternatively, you also may purchase coverage through a private insurer or through (or your state’s program, if available).

Drop Your Disability Insurance

Disability insurance replaces your income if you are medically certified as being unable to work or can’t perform your job duties with a corresponding income reduction. If you are no longer working and in retirement, you probably no longer need this coverage. When you stop working, you should consider canceling your disability insurance as the need for it has expired.

Life Insurance

The financial obligations that drove your life insurance needs while you were raising a family may have evaporated. However, you may find new needs arising from estate issues, such as liquidity, creating a legacy, etc.

Several factors will affect the cost and availability of life insurance, including age, health and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications.

You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.

Extended Care

For some, extended care insurance is a priority in this stage of life. With the expense of children in the rearview mirror, you can now turn your focus to buying protection against potentially the most significant health-care expense you are likely to face in retirement.

Designed to pay for chronic, long-lasting illnesses and regular care, whether in-home or at a nursing home, extended care insurance coverage is critically important since most of these costs are not covered by Medicare.

Final thought.

As you shift your focus towards wealth protection, a comprehensive insurance strategy becomes more important. Navigating the complexities of insurance is essential for safeguarding your financial well-being, ensuring access to necessary healthcare, and fulfilling your estate and legacy goals. By evaluating your insurance needs and adjusting your coverage accordingly, you can secure peace of mind and financial stability entering your retirement years.

Are you comfortable with your progress towards retirement? How about helping future generations meet their financial goals? If you have more than $2 million saved and need help from a wealth manager, the Peak Wealth Planning team can assist.

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About the Author

Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind.

Peak Wealth Planning provides concierge services to meet your wealth management needs. Services include: financial planning, investment management, esop diversification, retirement income, insurance, and estate planning advice. Peak Wealth Planning is a fee-based financial advisor based in Champaign, Illinois, and Fraser, Colorado.


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