Author Topic: No, I am not planning to murder my wife...  (Read 2894 times)

Capsu78

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No, I am not planning to murder my wife...
« on: January 12, 2015, 04:18:09 PM »
Trying to figure out if it is time to drop term life insurance on my wife.  All the educations and weddings are paid for and we are nearly debt free empty nesters.  I am sliding toward early retirement in that I am not actively prospecting for new clients and have wrapped up last years gigs.  My spouse, OTOH, has hit the biggest job of her career, likes the challenges of her job and brings home a big paycheck as well as my HC benefits.  She intends to keep on keeping on as long as it is possible.
Much of our NW is in 401k- ish not yet taxed assets.  I am not 59 1/2 so penalties I am not wanting to take stand between me and those funds for another couple of years.  So, my question:  If a spouse dies early and all their non taxed assets transfer to the living spouse, is that money available to live on until SS and pensions kick in?   We currently have enough term life insurance to bridge that gap, but I am thinking about "self insuring" if I knew I could manage living on our retirement assets.

dandarc

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Re: No, I am not planning to murder my wife...
« Reply #1 on: January 12, 2015, 04:27:59 PM »
Standard answer:

1.  Search "Roth Pipeline" and 72(t) (Substantially Equal Periodic Payments) for ways to get to your 401K / tIRA money before 59.5.

2.  Would you be OK if she were to pass without the insurance money?  If so, cancel the policy.  If not, think about it, and be sure if you purchase to not purchase a longer term, or larger amount of insurance than you really need.

Capsu78

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Re: No, I am not planning to murder my wife...
« Reply #2 on: January 12, 2015, 05:03:14 PM »
Hi Dandarc,
The amount of term insurance would replace approximately 9 months of her income and be substancial enough for me to live on for a good while.  I would also downsize out of the house and upon sale of the nearly paid off house within 6 months would free up enough capital to not have to touch the tax advantaged retirement funds nor have to touch our emergency funds.  I just don't know the tax treatment of 401K funds that belong to her now that would transfer to me via beneficiary stipulation.

dandarc

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Re: No, I am not planning to murder my wife...
« Reply #3 on: January 12, 2015, 05:13:57 PM »
http://moneyover55.about.com/od/RetirementAccountWithdrawals/a/401k-Beneficiary-Inherited-401k-When-And-How-You-Can-Take-Money-Out.htm

Even easier than getting to your own 401K money early - roll into an inherited IRA, take the RMD or more each year.  No penalties.  See option 2 for "under 59.5".

ShoulderThingThatGoesUp

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Re: No, I am not planning to murder my wife...
« Reply #4 on: January 12, 2015, 05:14:13 PM »
You might have found an even better keyword than the polyamorous person to make sure people read your thread.

dandarc

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Re: No, I am not planning to murder my wife...
« Reply #5 on: January 12, 2015, 05:17:01 PM »
Actually option 1 might be even better for what you want - leave it in the 401K.

Capsu78

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Re: No, I am not planning to murder my wife...
« Reply #6 on: January 12, 2015, 05:34:02 PM »
Thanks Shoulderthing!   I know what your screen name refers to and I have even been to Emmaus!

Capsu78

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Re: No, I am not planning to murder my wife...
« Reply #7 on: January 12, 2015, 05:40:43 PM »
Thanks Dandarc- that article is perfect and makes the case that I could drop the term insurance without too much of a risk.

RapmasterD

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Re: No, I am not planning to murder my wife...
« Reply #8 on: January 12, 2015, 06:55:37 PM »
OP - Your title is despicable. Words matter.