Is Bigger Really Better? Part 3
Let me tell you the story of the Pyle brothers.
They did nearly everything alike. They married twin sisters, lived next door to one another and invested exactly in exactly the same things. As a result, they each reached retirement age with a…pile of money.
Big R. Pyle didn’t much think about life’s risks. He shunned insurance, drove without a seatbelt and actually went swimming before his mother’s not-for-30 minutes-after-dinner rule was up.
Bet R. Pyle was more careful. He maintained generous amounts of insurance, was more conservative in his lifestyle and always obeyed his mother.
At retirement, Big R. ended up with the bigger pile of dough. And what’s more, he gloated to Bet R. that he was now “self insured,” having no need any more for his term life insurance. And good thing, too, as it was much too expensive to maintain.
Big R. once read in a book that he could take five percent off his investments in retirement to live on. That sounded fine to him. His problems arose when he actually got to retirement and realized that five percent might not be so easily obtained – certainly not with low risks investments. With his retirement income in danger of being halved due to the low interest rate environment, Big R. went to the stock market in search of higher returns. But he got in just in time for a big market drop.
Meanwhile, Bet R. seemed to be much more relaxed in his retirement years. He seemed to have plenty to spend and no worries about running out of money. When Big R. asked Bet R. his secret, Bet R. said, “I’ve got seatbelts on my money.”
It turns out that Bet R. actually started his retirement with less money than Big R. After all, he’d invested more conservatively and spent more during his working years to keep his insurance portfolio in place. Always consult a licensed agent when considering any insurance.
Part of his insurance portfolio was coverage to replace his wealth in case he lives too long or dies too soon, so he’s able to spend his slightly smaller pile of money faster, knowing there is a safety net to replace it.
At the end of the day, Bet R. has more money to actually spend and enjoy than Big R.
Skipping the benefits can be a very expensive.
Remember: don’t just aim for more wealth. Balance your wealth with benefits.