While preparing for your retirement, you will most certainly ask yourself the inevitable question: should I get the capital or part of it or simply withdraw the interest from my accumulated savings?
Don’t worry; you are not the only one thinking about this.
Although the accumulated amoung may be high, will it be sufficient for your lifestyle in the coming years?
Is a capital of $500,000 enough to meet your needs during retirement?
This question arises more and more often in our aging society. Is there really an answer?
Well yes, of course. It all depends on your financial planning.
Life insurance and the depletion of wealth go hand in hand.
This question should surface quickly during your introspection because the solution will establish what standard of living you desire to have.
Speak to an insurance broker and he will help you with your questions on this issue.
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It’s really all about the choice between planning to preserve your wealth or depleting your assets.
Would you like to leave an inheritance or use up most of your assets? To better demonstrate this, let’s take a look at the example below:
CASE STUDY FOR A WOMAN RETIRING AT 65 YEARS OLD
–SIMPLIFIED LIFE INSURANCE—
|INVESTMENTS AND INCOME :||
EXPLANATION AND CALCULATION OF THE EXAMPLE OF LORRAINE AND HER LIFE INSURANCE
As for the insured’s income, she will get $20,652 from both municipal and federal government and an additional $7,000 from her retirement pension, for a total of $27,652.
Since she wants to live on $45,000 a year, she still has a gap of $2,029 monthly or $24,348 $ for each year.
As for the RRSP, the accumulated value of her RRSP savings over a decade must be considered. With her contributions of $600 a month at a rate of 4%, she can expect $606,000 to come.
Considering that the average life expectancy is 91 years old, Lorraine must, in order to reach her goal, earn $2,029 monthly for a period of 26 years.
This is more than the value of the interest earned. At this rate, at age 91, her savings will be worth $570,000.
At age 65, this is less than her capital but much more ($350,000) than its value in 2018.
This leaves her with sufficient room for maneuver to combat inflation, and above all, to forecast unexpected expenses concerning her health.
If Lorraine opts for the depletion of her capital, withdrawals would potentially increase to $3,000 a month ($36,000 annually) supplemented by her annuities (guarantees).
SOME ADVICE FOR LIFE INSURANCE AND PREPARING FOR YOUR RETIREMENT
In short, don’t do anything until you have consulted a life insurance broker.
If you don’t have a broker and you want to receive professional advice, look no further! Our partners are there for you!
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