Find the Income to Insure Against Retirement Risks
When money gets tight, it can be tempting to ditch some insurance coverage to balance your budget. However, that could leave you high and dry. Instead, figure your premiums into your income plan itself.


You have probably seen TV commercials recently where:
- A retired couple decides to drop their life insurance policy in order to create some extra cash.
- An ex-quarterback talks about health insurance to supplement basic Medicare.
- A recognizable mustachioed actor touts the advantages of tax-free cash through a reverse mortgage.
Evaluating the products and the companies offering them is absolutely critical before you make any decision. However, the real challenge for you may be whether or not you can find income elsewhere to:
- Pay the life insurance premiums instead of deciding to drop the policy.
- Pay the higher health care premiums for the more generous Medicare Supplement plan.
- Purchase longevity insurance to complement the reverse mortgage drawdowns. (Longevity insurance is the opposite of life insurance; it pays you income if you live, which means in this case it could continue the cash flow from reverse mortgage drawdowns beyond a certain age.)
Income first
As I always advocate, it is better to create a plan for retirement income first, and then figure out whether you can afford the premiums on the insurance protection you believe you need. That allows you to afford all the pleasures and necessities — including insurance — that best fit the needs of you and your family, with less worry and much more flexibility.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
By unbundling the income and insurance elements of your plan, you can adjust them to reflect market conditions, the change in the personal circumstances of you or a spouse, or a change in situation of a child or grandchild. And your initial planning has all the flexibility of the individual components.
The value of staying the course
The older you are, the more likely you are to need the benefits of insurance (especially during pandemics). That means the value of each policy increases as you age. You may be able to lock in annual premiums that will remain unchanged; however, for many policies, prices will continue to grow annually. Whatever the circumstances, some people stop paying the premiums, which makes the insurance worthless when you need it. So, continued insurance premiums — whether increasing or not — have to be figured into your income plan.
Fortunately, you can build an income plan that allows you the flexibility to choose the best insurance policies for you and that fit your budget.
It just takes a little homework …
What type of insurance?
You may want life insurance, for example, that will fund a financial legacy for your heirs. On the other hand, perhaps you may only want enough to cover your funeral expenses, because you have taken care of the kids in other ways. You may consider long-term care insurance a necessity to prevent you or your spouse from having to sell the family home if either or both of you require a stay in a long-term care facility or need to hire an aide for home care.
Perhaps a Medicare Supplement policy will pay expenses that Medicare doesn’t. Or you hope to stay in your home and a reverse mortgage will help you do that. There are lots of options here, so you want to know what you can afford.
Different companies will offer terms that you can analyze to make sure they offer what you need. If you don’t understand the terms, find an agent or agency to help you interpret them. If you still aren’t clear, look for another insurance adviser.
Your retirement income plan
A mix of stability and reasonable market risk is the best way to create income during retirement. I favor allocating a portion of your income to annuity payments as a way to provide guaranteed income, combined with dividends, interest and IRA withdrawals, along with Social Security payments and a pension, if you are lucky enough to have one. Allocating your income among major income sources provides a reliable stream of cash and gives you the opportunity to continue to adjust to market conditions.
Happily, you can take advantage of certain tax benefits offered by income annuities and insurance products if you design the income plan and insurance purchase separately. You may not get the best tax treatment if you purchase a hybrid insurance product that combines multiple protections.
Plan to create the income to pay for your insurance needs. Consideration of flexibility of the products and transparency about how they work is equally important.
Have you created the retirement income to provide cash flow to pay insurance premiums and optimize tax benefits? Start your analysis by downloading a free evaluation of how much income your savings can produce. Visit Go2Income for the answers you need.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Jerry Golden is the founder and CEO of Golden Retirement Advisors Inc. He specializes in helping consumers create retirement plans that provide income that cannot be outlived. Find out more at Go2income.com, where consumers can explore all types of income annuity options, anonymously and at no cost.
-
Ten Cheapest Places to Live in Texas
Property Tax Looking for a cheap place to live in Texas? Look no further. These counties have the lowest property tax bills in the Lone Star State.
-
AI Is Missing the Wisdom of Older Adults: What It Means for You
AI will increasingly affect your healthcare and finances, but young workers are primarily designing the systems and getting most of the jobs.
-
The Three C's to Financial Success: A Financial Planner's Guide to Build Wealth
Consistency, commitment and confidence in your chosen strategy are more critical to your financial success than finding the 'perfect' financial plan.
-
A Financial Adviser's Guide to Solving Your Retirement Puzzle: Five Key Pieces
If retirement's a puzzle you're struggling with, try answering these five questions. The answers will guide you toward a solution.
-
You're Close to Retirement and Cashed Out: How Do You Get Back In?
If you've been scared into an all-cash position, it's wise to consider reinvesting your money in the markets. Here's how a financial planner recommends you can get back in the saddle.
-
After the Disaster: An Expert's Guide to Deciding Whether to Rebuild or Relocate
Homeowners hit by disaster must weigh the emotional desire to rebuild against the financial realities of insurance coverage, unexpected costs and future risk.
-
A Financial Expert's Tips for Lending Money to Family and Friends
What starts as a lifeline can turn into a minefield if the borrower ghosts the lender. Following these three steps can help you avoid family feuds over funds.
-
What the HECM? Combine It With a QLAC and See What Happens
Combining a reverse mortgage known as a HECM with a QLAC (qualifying longevity annuity contract) can provide longevity protection, tax savings and liquidity for unplanned expenses.
-
721 UPREIT DSTs: Real Estate Investing Expert Explores the Hidden Risks
Potential investors need to understand the crucial distinction between a REIT's option to buy a Delaware statutory trust's property and its obligation.
-
I'm an Insurance Expert: Yes, You Need Life Insurance Even if the Kids Are Grown and the House Is Paid Off
Life insurance isn't about you. It's about providing for loved ones and covering expenses after you're gone. Here are five key reasons to have it.