DW and I are recently married in our late 20s with no debt, around $150k in retirement accounts, both healthy and hoping to have a family (2-6 kids? not 100% sure right now) at some point. I will be the primary earner in future (currently make $80k-ish a year) - DW will almost assuredly become SAHM if/when we have children.
We're trying to figure out how much term life insurance we should get. Social Security makes this far more complex than I would like because it is a very similar effect to life insurance.
When I look at my Social Security estimates, it shows currently that I have qualified for $1,725 for primary caregiving parent, and $1,725/child. Max family benefit of $4026/month. So in the following scenarios, where I die (Scenario A), she will receive:
- 1 child - $3,450/month
- 2+ children - $4,026/month
That's a large amount of money relative to our spending currently and reduces our need for life insurance somewhat significantly. Most companies (my current one included) have some life insurance ($150k, 3x salary, etc) as a benefit. Should something happen to me, unless we have a ton of children my wife should be in pretty decent shape right now even without any life insurance. We probably will get something like $300-500k range for me, to cover the scenario where we have a lot of children (closer to 6), I die when they are young before being able to add lots of savings, and where $4k/month might be not quite enough. This would let us completely pay off a mortgage and fund their college, etc, as well as bridge the years for her between kids leaving and eligibility for retirement/pension/SS.
For my wife, if she dies (Scenario B) according to her earnings from SS we currently get:
- 1 child - $1,120/month
- 2+ children - $1,120/month
We have no idea what to insure her at...
A few questions:
- It sure seems like in Scenario A that unless DW works, none of the benefits are taxable - I'm not sure how to make sense of this though
- In Scenario B, if I continue working, 50% of her benefit is taxable
- What would other people purchase for life insurance on either of us in this sort of situation?
- What other factors should we consider?
Note: I crossposted this to Bogleheads since I am interested in both perspectives.