“There are many choices that are available to us. We have the freedom to move anywhere we like – or nowhere at all. How should you make this huge decision?”
Forbes’ recent article asks, “Where Will You Live In Retirement?” The answer? There’s no one right answer, when it comes to where to retire. It’s going to be totally up to you. However, make sure that you put in some serious thought, discussion and preparation. If you are married, there’s going to be more than one opinion that matters.
There are several important considerations in deciding where to live. One of the most critical is your finances. Try to understand how much you should be allocating to housing. If you have some equity in your current home, that could play a part in your future financial viability. You should also consider how you want to spend your time in the next few decades of your life, such as traveling or continuing to work and staying active in your community. This will have an effect on where you may want to stay geographically, or whether you downsize.
Where you family is located, is also a factor. Many seniors like to be close to their grandkids. Some also like the active 55+ communities in warm weather climates. However, if you choose this option, be sure do a thorough check before you make a commitment.
Speaking of warm weather, if you move somewhere for the climate, check out the destination in all seasons for an extended length of time.
Another important factor in making a move is friendship. The relationships you have and those you choose to develop, will be helpful in any change of residences.
If you’re considering a move, don’t delay. You should move while you’re still healthy and able to weather the change and enjoy your new home.
Reference: Forbes (July 30, 2018) “Where Will You Live In Retirement?”
Suggested Key Terms: Retirement Planning
How Does Cash Value Grow in a Life Insurance Policy?
“So, how exactly does cash value accumulate in your permanent life insurance policy? The details vary, depending on the type of policy you have and each individual life insurance company.”
Cash-value life insurance, also called “permanent life insurance,” has a death benefit, as well as cash value accumulation. While variable life, whole life, and universal life insurance each have built-in cash value, term life doesn’t. When the cash value has accumulated to some size, you can use the funds to:
- Pay your policy premium;
- Take out a loan at a lower rate than banks offer;
- Create an investment portfolio that maintains and accumulates wealth; or
- Supplement your retirement income.
Investopedia’s recent article, “How Cash Value Builds in a Life Insurance Policy,” explains how the process typically works.
When you pay the premium on a cash-value life insurance policy, part of the payment goes to the policy’s death benefit (based on your age, health and other underwriting factors). Another portion covers the insurance company’s operating costs and profits. The remainder of the payment is attributed toward your policy’s cash value. The life insurance company will invest this money in a conservative-yield investment. As you continue to pay premiums on the policy and earn more interest, the cash value increases.
With a cash-value life insurance, you generally pay a level premium. In the early years of the policy, a higher percentage of the premium goes toward the cash value. However, with time, the amount earmarked to cash value decreases.
Each year as you get older, the cost of insuring your life gets more expensive for the life insurance company. That’s why the older you are, the more it costs to purchase a term life policy. When it comes to cash-value insurance, the insurance company will add in these increasing costs.
The cash value accumulation will vary, based on the type of policy you have. Whole life policies provide “guaranteed” cash value accounts that grow according to a formula determined by the insurance company. Universal life policies accumulate cash value based on current interest rates. Variable life policies invest funds in subaccounts, which operate like mutual funds. The cash value grows or falls, based on the performance of these subaccounts.
Talk to your insurance adviser to see how to calculate potential cash value accumulation of your permanent life insurance policy. Remember not to let it go to waste: the cash value left in your policy at your death returns to the insurance company-not to your heirs.
Reference: Investopedia (April 30, 2018) “How Cash Value Builds in a Life Insurance Policy”
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