When the last of the children head off to college or out on their own, some parents, although sad, breathe a sigh of relief. For many, getting the kids out of the house will immediately relieve some serious financial stress. But it's important to be smart with how you handle that extra income so that you're setting yourself and your children up for a secure future. Here's what to do when your dependents become independent:
Think carefully about cancelling your life insurance. It might seem like a good idea to cancel your life insurance when you no longer have dependents and are comfortably living off of your retirement; but this decision should be made thoughtfully. Many young people end up doing a second stint in their parent's' home or will need ongoing support (if you have a special needs child, for example). An unexpected death can also take a heavy financial toll on spouses, who may struggle to pay the bills without their partner. Finally, some parents choose to maintain their life insurance with the idea of leaving a legacy for their children or contributing to an important cause. Whatever you decide, be thoughtful about whether to maintain your life insurance into the future.
Secure your health. As health issues related to aging increase, it's important to have the right kind of coverage. If you are lucky enough to retire early, you may need to purchase your own health insurance until Medicare kicks in at age 65. Before you leave the workplace, find out if you qualify for COBRA, which will allow you to keep your health insurance for up to 18 months after you retire. Lastly, do your research on Medicare programs to find out whether you will need to fill any gaps in coverage.
Consider extended care insurance. Also known as long-term care insurance, extended-care insurance is for people who need help with the activities of daily living--such as eating, bathing or dressing--due to an illness or impairment. Whether it takes place in the home or in an assisted living facility, this type of care is usually beyond what's covered by your basic healthcare plan. Purchasing extended-care insurance can help you to protect your assets and get the assistance you need when you are unable to care for yourself.
Meet your children's health needs. It's important to keep your son or daughter insured through the risky teens and early 20s. If they're going off to college, there will likely be a health plan available through the school. If your child is leaving the home but not going to college, be sure your health insurance will continue to cover him or her for the next several years. If not, you may need to purchase an additional policy.
Becoming an empty nester is an exciting and sometimes scary prospect. Follow these suggestions to keep your financial health in tip top shape well into the future.
For any insurance questions, call or contact Mathews Insurance, Inc. today.