Real-Life Case # 1 Retiring Officer John Doe Age 43 Final Average Salary $90,000.00 Pension= 50% of FAS or $45,000.00 In Good Health Life Expectancy- Age 78* *Source: Social Security Administration Mrs. Doe (John’s Wife) is the same age and also in good health.
Option A Maximum Option B 85% Difference $45,000 14%$38,700 $6,300.00 Per Year Officer John Doe
Doe Elects Option A (Full $45,000.00) Purchases $1,000,000 Life Insurance Guaranteed to Age 100 for $6,000.00 per year* *Estimate based on 43 year-old male in good health- rates are illustrative and vary from person-to-person
As per Social Security Rules, Officer Doe dies at age 78 Mrs. Doe Collects $1,000,000 Tax-Free From the Insurance Company *Note: The Doe’s Have Paid Approximately $204,000 into the Policy over 34 years and Will Receive $1,000,000.00 in Death Benefit. In This Case, the Return is Over 8.5% Tax Free.
Mrs. Doe’s Options: 1. Live on the $50,000 Interest and Leave the Entire $1,000,000 Proceeds to the Children 2. Use It All (Approximately $70,000 Per Year Over 20 years to Compensate for Inflation) 3. Use What She Needs and Leave the Balance to the Children
End Result: The Doe’s Usually Pay LESS Than the Cost of “Option B” Every Year Mrs. Doe Has MORE Money and MORE Options In Her Later Years Kids Receive Whatever is Left Over (Instead of NOTHING) and say nice things about you when you’re gone.
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