Buy term insurance and pay off your home mortgage early. A strategy designed for the "working rich."9/18/2020 Some advisers refer to debt as good debt and bad debt. Good debt could be a home mortgage, which is tax deductible, and credit card debt which is not tax deductible. While there may be some merit in this thought process, debt is still debt... Try this exercise and see how it feels.
Assume at age 65 you want to retire. Assume that retirement means that all debt at age 65 is covered by passive income. Assume that passive income will come from investments, savings, pensions, retirement plans and social security. Assume that debt will be all expenses you incur from age 65 until all retirees pass away. One strategy I like is to prepare for retirement by reducing ALL debt by your retirement. Therefore, look at fixed debt and variable debt as two expense items. Fixed debt are expenses that never go away: healthcare expenses, food, someplace to live, utilities, cell phone, transportation, certain types of insurance and repair/maintenance/replacements of items required to live. Variable expenses are eating out, traveling and insurances you need past retirement. What insurances will you need past retirement?
WHAT IF... You could plan your life where you saved and invested smartly so you could self-insure your retirement, meaning no need for life or long-term care insurance after you retire. Learn more about Layered Life Insurance. Book a call with Howard
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