How to Create a Savings Plan For Your Family

Many Americans are now working to put together a savings plan that will enable them to provide for their families after they die. The recession decimated the baby boomer generation’s retirement savings and financial assets, forcing many of them out of retirement and into low-wage jobs.

According to a MetLife survey, baby boomers increased their retirement age to 71 years old on average in 2012. Long-term health care costs are a major concern for most baby boomers, with many believing it should be covered by Medicare.

Life insurance is one investment that can provide loved ones with financial stability in the event of the death of a spouse or parent. Even a small investment may provide survivors with more income than savings or Social Security alone.

“This is the simplest way to make something out of next to nothing,” AARP Financial president, Mac Hisey, told Money Magazine.

Those on a tight budget may want to consider purchasing a second-to-die life insurance policy, which is usually less expensive than an individual policy. According to Money Magazine, this joint policy covers both husband and wife and pays the beneficiary, who is usually children, when the second spouse dies.

Second-to-die life insurance, also known as survivor-ship life insurance, is used to pay taxes, but it can also be used in other ways, such as a spendthrift clause that requires the death benefit to be paid out over time rather than in a lump sum payment. The beneficiary cannot change the settlement option, and the beneficiary’s creditors cannot take the money to pay debts. A life insurance expert can advise you on the best type of policy to suit your needs.

If you have a special needs child, you can establish a trust that pays the trustee but is funded by the second-to-die life insurance policy. A trustee is appointed to manage the trust and pay for the child’s care. Again, speaking with a lawyer or expert in the field is the first step in determining any issues with this potential option.

The recession demonstrated that anyone can experience difficult financial times, putting their assets in jeopardy. Life insurance provides policyholders with the assurance that they will be able to leave something to their survivors.

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