Once your children move out, your money goals often shift toward retirement. Many people earn the most money of their careers during these years, and their savings are near their peak. Because you've worked hard to build that savings, protecting it is critical, both before and after you retire. Investing wisely is only part of the plan. The right insurance can shield you from large, unexpected costs, especially health care. This is also a good time to think about estate planning: what happens to your money and property after you pass away, and what legacy you want to leave.
Home and Auto
If your mortgage is paid off, your lender no longer requires homeowners insurance, but you should still keep it. It protects your home from damage and covers you if someone is hurt on your property and sues. Review your policy now, since building costs and the value of your belongings have likely risen. Make sure you're covered for the full cost to rebuild at today's prices. A simple video walk-through of your home can help prove what you owned if you ever file a claim.
If your children were on your auto policy and have moved out, removing them may lower your premium. Some insurers also offer discounts for driving fewer miles.
Also consider an umbrella policy, which adds extra liability coverage on top of your home and auto insurance. If you're sued for more than those policies cover, the umbrella policy pays the difference. Coverage often starts at $1 million and is usually affordable for the protection it offers.
Health
If you retire before 65: Medicare usually doesn't begin until age 65, so you'll need coverage to fill the gap. If your spouse still works, you may be able to join their employer's plan. Losing your own coverage often allows you to enroll outside the normal yearly window, but check with the employer. You may also be able to keep your former employer's plan through COBRA for up to 18 months, though you'll usually pay the full cost yourself. Another option is buying a plan from a private insurer or through HealthCare.gov (or your state's marketplace), where you may qualify for help with premiums.
Signing up for Medicare: Your first enrollment window lasts seven months: three months before your 65th birthday month, the month itself, and three months after. Missing it can lead to penalties that may last as long as you have Medicare. Part A covers hospital stays, and Part B covers doctor visits and outpatient care. You should also consider Part D, which covers prescription drugs. Even if you take few medications now, signing up when first eligible helps you avoid a permanent late penalty. Some people instead choose Medicare Advantage (Part C), which bundles coverage through a private company but may limit which doctors you can see.
Medigap: Original Medicare doesn't cover everything, and you'll still face deductibles and copays. Medigap policies, sold by private insurers, help pay those costs. The best time to buy is during the six months after you turn 65 and enroll in Part B. During that window, insurers generally can't turn you down or charge more because of health problems. Note that Medigap can't be used with a Medicare Advantage plan.
Disability
Disability insurance replaces part of your income if illness or injury keeps you from working. Keep it as long as you rely on a paycheck, since a disability in your final working years could hurt your retirement savings. Once you retire, the need for it usually ends, and you can consider canceling it.
Life
The reasons you needed life insurance while raising a family, such as covering the mortgage and college costs, may no longer apply. Still, life insurance can help in other ways. It can provide cash to pay final expenses, debts, or estate taxes so your heirs don't have to sell property in a hurry. It can also leave money to family or charity, or replace pension or Social Security income your spouse would lose after your death. Some couples use a "second-to-die" policy, which pays out only after both spouses have died and is often used in estate planning.
The cost and availability of life insurance depend on your age, health, and the type and amount of coverage. Policies include fees, such as mortality charges, and canceling early may lead to surrender charges and income taxes. Find out whether you can qualify before building a plan around life insurance. Any guarantees depend on the insurance company's ability to pay claims. Finally, check the beneficiaries on your policies and retirement accounts, since these usually override what your will says.
Extended Care
For many people, extended care insurance, also called long-term care insurance, becomes a top priority at this stage. It pays for help with daily activities like bathing, dressing, and eating when a chronic illness, disability, or condition like dementia makes them hard to do alone. Care may be at home, in assisted living, or in a nursing home.
This coverage matters because costs are high. In many areas, a private nursing home room costs more than $100,000 a year. Most people who reach 65 will need some type of long-term care, yet Medicare covers very little of it, and Medicaid usually helps only after you've spent most of your savings. Premiums are generally lower if you buy in your 50s or early 60s while still healthy. Some people choose a hybrid policy that combines life insurance with long-term care benefits, so if you never need care, your beneficiaries receive a death benefit instead.
The Bottom Line
Your insurance needs change as your life does. Reviewing your coverage when your children leave home and again as retirement nears can help protect the savings you've worked so hard to build. As you are looking at your options, if you need any help, or have questions, please give us a call. We’re happy to help.