Personal Finance (Not Investing) • Term Life - How much do I need?

I think we (and many others) have a philosophical difference on the purpose of life insurance. I think you and some others are advocating they should have enough insurance for their family to be “comfortable”. I’m in the camp saying they should have something closer to what they’d need to replicate their future spending and saving (which is just deferred spending).

$6m sounds like a lot of money but it’s still less than the PV of the OPs future spending and savings (which is the same as their future after tax income). $6m is still enough to give their survivors a good lifestyle. But not what they would have had without the loss.

Future income is very different than a big payout today that will then produce an income.
If I day and get $6 million dollars, those $6 million using a 3.5% withdrawal rate provide $210k a year in perpetuity. More than likely that portfolio will grow and provide even more. This is very different than making $300k a year after taxes over the next 20 years and it adds up to $6 million.

As I said, for us, the goal would be to provide an unchanged lifestyle and not a more lavish lifestyle if I die. Life insurance is cheap right, so buy a ton of it. If one was to make a $10 decision every day and instead of spending it investing it, in 30 years it would be worth about half a million. Every $10 decision counts and spending an extra $90 a month here, another $30/month there, etc it all adds up.

Statistics: Posted by EnjoyIt — Fri Dec 13, 2024 11:15 am — Replies 83 — Views 2646

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