Business

Life Insurance Is A Reason Why Your Spouse Doesn

I’ve faced criticism for encouraging my wife to re-enter the workforce after she left in 2015. However, it’s important to clarify that she hasn’t been truly retired. Instead, she has been actively engaged as a full-time mom since 2017. In addition, she has helped do a lot of the operational and editorial work for Financial Samurai since 2009.

One reason why I’d like her to return to work is to ensure she can provide for the family in case I pass away before our kids reach adulthood. With ever-increasing inflation, raising a family is getting more difficult by the year. In addition, even though the economy is hunky dory right now, there will be downturns in the future. After all, the best time to gather food is during the summer, not the winter.

Managing our family’s finances, overseeing rental properties, and running Financial Samurai, I play a vital role in our financial stability. If something were to happen to me, our family would be at financial risk. However, if my wife returns to work once our kids are in school full time, it would enhance our family’s security.

I admit to being selfish because I want the reassurance that, in the unfortunate event of my premature passing, my wife and kids will be alright. There’s a reason for the saying, “May you rest in peace.” There won’t be peace if they’ve got to upend their lives because of me.

Encouraging my wife to update her resume, refresh her job skills, earn income, and have a purpose in case I’m not around is a source of comfort for me. Additionally, I believe that her working sets a valuable example for our children.

My own strong work ethic partly stems from witnessing my parents’ dedication to work growing up in Japan, Taiwan, and Malaysia. If our kids can cultivate a similar work ethic, it would significantly improve their chances of achieving financial independence in the future.

Life Insurance Reduces The Need For A Spouse To Work

I’ve been so focused on planning for a future that involves returning to work, that I forgot about our life insurance policies obtained through Policygenius. Amid the pandemic, my wife and I secured matching 20-year term life insurance policies with $750,000 death benefits. Before we had mismatched policies with different death benefit amounts and durations.

My search for an affordable policy spanned several years, but in 2017, I faced a setback when diagnosed with sleep apnea, limiting me to a policy costing an unaffordable $480 per month.

Determined to find a solution, I underwent another sleep apnea study, and the results showed a milder condition. With this improvement, I reapplied for life insurance and successfully secured a policy at a much more manageable $138 per month. The relief was palpable. Please be smart and lock down a life insurance policy before seeing a doctor for anything other than a cold.

Following a podcast episode where my wife and I discussed intrinsic versus extrinsic motivation to work (Apple or Spotify), a reader reached out with the following email.

Email from podcast listener that made me see the light:

Sam,

Really enjoy the content you provide weekly, thank you!

On a recent podcast, you discussed the benefit of your wife returning to work in order for her to be able to provide for herself and your children should something happen to you. 

My wife and I currently both work full time jobs. I know that I have enough life insurance that can replace my income through the rest of her working years so she and our children are not impacted financially should something happen to me. 

We are looking over the budget right now to see if we can make it work for her to stay home – our medical expenses and situation differ drastically from most families. 

Given your wife’s comments about not wanting to return to work, I’m wondering why you feel this is what is best if the same goal can be accomplished by affordable term insurance?  I realize you may not be insurable, if so, this is likely coming across as rather cold – if that’s the case I apologize. 

I’m sure this sounds critical, and I don’t know your family situation, from the outside, appears she will be happier at home and you don’t have to deal with a competing working schedule, asking for time off, office policies/frustration, etc. 

Jeremy 

Life Insurance Helps Keep Retirees Retired And Stay At Home Parents At Home

Ah hah! I never though of this angle before.

Thanks to Jeremy, I now recognize the immense relief our life insurance policies provide. In the event of my premature death, the $750,000 tax-free death benefit would cover approximately three years of living expenses if she didn’t change a thing.

This period should afford my wife ample time to navigate our financial matters. She’ll have enough time to sell off assets at a reasonable price. She could also hire assistance for sustaining Financial Samurai since there are now so many articles to update. Finally, she could bide her time in securing part-time or full-time employment if necessary.

While ideally, I would prefer a $1 million death benefit, $750,000 was the maximum achievable without undergoing a medical exam. Perhaps I’ll just shop around for another $250,000 term life insurance policy to top things off.

With our life insurance policies in place, my wife doesn’t necessarily need to return to work solely for the family’s financial security anymore. Instead, any decision to re-enter the workforce would be driven by her finding fulfillment in the chosen endeavor.

Game Plan To Make The Death Benefit Last Longer

In the meantime, to make the death benefit last longer, my wife could dramatically cut down on sneaky expenses to the tune of $1,500/month. With one less person to feed, saving $1,000+/month on food should be relatively easy.

If needed, the next step would be to downsize homes by selling our existing one and moving back into our old home. I don’t think our kids would object too much since they lived there for three years and enjoyed it. It was a home I had envisioned living in for 10 years. With only three people, if she doesn’t find someone new, our old home’s size is more appropriate.

The final cost-saving measure would be to stop paying for language immersion school and transfer our kids to a free public school the following year. Although this will be the most disruptive move, the savings would be immense. I find solace knowing that I changed grade schools every 2-4 growing up and turned out OK. Change forced me to work on my social skills.

median square footage of single-family homes over time in America

Going Back To Work In Some Capacity Is Still Worthwhile

Despite the realization my wife doesn’t have to return to work thanks to my life insurance policy, I still think it’s a good idea. Our financial independence status has shifted after acquiring a new home. If my wife were to return to work, we could potentially regain financial independence sooner by one or two years.

There will be a void to fill once both kids are in school full-time starting September 2024. Why not spend the extra free time finding something interesting to do that also pays? Alas, after years of autonomy, it’s hard to be back on someone else’s schedule.

Any return to work would be temporary. Working for three-to-five years after enjoying absolute freedom from 2015 to 2024 seems like a favorable trade-off.

Short-Term Sacrifice For Financial Freedom

What are you willing to sacrifice for financial freedom? Personally, I’m willing to do just about anything.

Some individuals opt for mini-retirement breaks on their path to financial freedom. This is a wise strategy as it prevents their resumes from becoming too stagnant. If I had a retirement do-over, I would have taken a three-month sabbatical to extend my career at least until age 40. Leaving work at 34, in retrospect, was too early.

Fortunately or unfortunately, my wife and I have taken extended breaks. Our 12-year and a nine-year hiatuses place us at risk of challenges in reentering the workforce. I’ve witnessed this scenario too often: a parent leaves work to become a stay-at-home parent for years, only to find no comparable-paying jobs awaiting their return.

However, if we manage to secure jobs again, it presents an opportunity to refresh our respective resumes. By dedicating a focused three-to-five years to work and aggressive saving, we believe we can secure our financial well-being for the remainder of our lives.

Having already budgeted for major expenses such as college, a new car, and our forever home, there are no significant financial hurdles ahead. The main challenges lie in the inevitable unexpected expenses we will encounter, making it crucial to urgently rebuild our liquidity before they occur.

While life insurance provides us with security, the window of opportunity to reenter the workforce is narrowing. Consequently, in our mid-40s, I am eager for both of us to give work one last dedicated effort.

Reader Questions And Suggestions

Have you ever thought about how life insurance decreases the need for one parent to have to go back to work? If so, is getting life insurance even more valuable since it lets at least one parent remain free?

If you’re looking to get an affordable life insurance policy, check out Policygenius. You’ll get customized quotes in one place. The relief I feel from having matching term life insurance policies alone is worth the monthly premiums.

To achieve financial freedom sooner, join 60,000+ others and sign up for the free Financial Samurai newsletter.

Leave a Reply

Your email address will not be published. Required fields are marked *

Check Also
Close
Back to top button