Social Security Income Replacement Amount Needed?

[Northeast Agent]

How much additional life insurance should someone have (besides for burial expenses) to replace the second Social Security check when a spouse passes? I'm not talking people with assets/property, but rather renters who should be able to stay put when the time comes.

Recently two Medicare clients of mine were widowed. One works part time (and plans to for two more years, as her own health is declining) and has her husband's 401K, which she's getting $250 per month for the next four years before it's depleted. The other just has Social Security.

Both of these ladies basically told me, "I think I need to go on Medicaid now as I'm down to one check." However, their SS checks are over $1,800 per month. so I had to tell them they are NOT Medicaid level. Both are on their respective State's Pharmaceutical Assistance Programs, but they seemed to think they could now get a lot of extra help, which isn't the case.

Some people in their 50s seem to think they'll never get old, sick, etc but if they're healthy they should be buying it then.

 

[LostDollar]

That seems like a budgeting and estate planning exercise, even for renters, which would have to start (if they are even willing to think about life situation at 70) with guessing about health and employment for the next 10-15 years and what their actual social security will be. I don't know how one would generalize this, but if you have no family and have to consider life expectancy and living costs, I suspect that anything under $100,000 would never be enough in today's America. (And likely $500,000 or more is a more realistic number.)

 

[rousemark]

How much additional life insurance should someone have (besides for burial expenses) to replace the second Social Security check when a spouse passes? I'm not talking people with assets/property, but rather renters who should be able to stay put when the time comes.

Recently two Medicare clients of mine were widowed. One works part time (and plans to for two more years, as her own health is declining) and has her husband's 401K, which she's getting $250 per month for the next four years before it's depleted. The other just has Social Security.

Both of these ladies basically told me, "I think I need to go on Medicaid now as I'm down to one check." However, their SS checks are over $1,800 per month. so I had to tell them they are NOT Medicaid level. Both are on their respective State's Pharmaceutical Assistance Programs, but they seemed to think they could now get a lot of extra help, which isn't the case.

Some people in their 50s seem to think they'll never get old, sick, etc but if they're healthy they should be buying it then.

They will lose the amount of the smallest SS check they receive as a couple. They should have some idea of how much of the income the deceased consumes.(food, clothing, insurance, etc) . The need will be the difference between that amount and the smallest check. It is doubtful that people in the financial condition you mention will be able to afford enough insurance to cover that amount for the life of the survivor but you can provide enough to cover a period of years in order to give them time to adjust their standard of living.

 

[WinoBlues]

but you can provide enough to cover a period of years in order to give them time to adjust their standard of living.

Transition cash.

 

[somarco]

For every 1,000 bucks per month in income in retirement, you need to have $240,000 saved. (Or in life insurance payout).

Note, the information in this article (linked below) is for a LIFETIME residual. Adjust accordingly.

How the $1,000-a-Month Rule Will Save Your Retirement