Life insurance helps reduce financial risk to your family if something happens to you. But coverage that meets your needs when you’re 25 may not fit when you reach 45 or even 65.
To start looking at your life insurance needs, ask yourself, “What will my family need if I die?”
It may be helpful to use a calculator or worksheet to find out what coverage you need. Download the Life Insurance brochure at www.kpers.org or try an online calculator. The brochure has a worksheet on the last page you can use.
Consider your age and the stage of life you’re in. Not everyone’s insurance needs will be the same, but here are some scenarios to give you an idea.
You may not need significant coverage yet. But along with funeral expenses, life insurance can pay off student loans, car loans, credit cards and other debt.
It’s an exciting new chapter in your life. There are two of you now, and with that comes new responsibilities to each other. There may be two sets of debt to consider, as well as home ownership and a new family. You’ll want to make sure you and your spouse are covered for these new financial obligations.
If home ownership or children haven’t entered the picture, you’ll still want to consider your combined incomes. Would you or your spouse be able to maintain your current standard of living if something happened to one of you?
Things to consider:
You’ve got a lot of responsibilities on your shoulders — most likely a mortgage, child care, family health insurance coverage and other monthly bills. If you die, you may need significant life insurance coverage to help your spouse (if you have one) maintain your home and provide for your children, now and in the future. Single parents may need coverage the most.
With children on the way out or aging parents on the way in, it’s important to reassess your life insurance needs. It can provide the money to meet financial goals and help keep the assets and the lifestyle you’ve worked hard to achieve. Important considerations may include college tuition and elder care.
Your life insurance needs may decline once your children are out on their own. You’ll still need to consider how close you are to retirement, how many years are left on your mortgage, and other debt and income needs. Life insurance may also give you an opportunity to support a charity, leave a legacy for your children and grandchildren, or cover estate taxes.
Keep in mind that KPERS and Judges members already have basic life insurance equal to 150 percent of annual salary. Your employer pays for this benefit. KP&F members have a death benefit built into their retirement plan.
But your basic benefits may not be enough. Optional group life insurance can provide additional coverage. Many KPERS employers, including state agencies, offer optional life insurance. You pay the premiums through payroll deduction, and you can change your coverage anytime. Visit KPERS Additional Benefits or talk to your employer for more info.
Most of us have struggled at times with managing money. Using a budget can be the answer, but not every budgeting method works for everyone. Here are some techniques to help you manage money your way.
Nothing beats cold hard cash. Start by labeling envelopes, each with the name of a monthly expense and budgeted amount. Put that amount of cash in the envelope and when it’s gone, it’s gone. Then start over the next month. It might not work for mortgage or utility payments, but using cash for things like groceries, entertainment and clothing could help keep you on budget.
If you’ve never used a budget, this is a good way to get started. Keep a notebook in your pocket or purse and write down all of your daily expenses as you go. At the end of the month, categorize the expenses and add them together. This is the first step to creating a budget, and it can be a real eye-opener to see how much you spend and on what.
This technique divides your income into general categories and percentages of spending in order of importance. The first 50% is spent on “needs” – the basics such as housing, groceries, transportation and utilities. The next 20% is for savings and paying off consumer debt, like credit cards and student loans. The last 30% is spent on “wants” – things you could live without. Cell phone, dining out and entertainment fall here.
This is a popular budgeting technique since most computers already have software like Microsoft® Excel® installed. Budget templates are often included for free. These templates have headings and calculations already in place. All that’s left to do is customize it for your family expenses and key in your transactions.
Technology can help you integrate your banking with your budgeting. An online budgeting app or website gives you access to your information from almost anywhere. You can adjust your budget on the fly or connect to your bank accounts for automatic updates. Budgeting software allows you to connect your budget to your accounts, but are limited to one computer or device. Software is usually more expensive than online sites or apps, but often provide more detail.
Last year the Kansas Legislature changed Working-After-Retirement rules for KPERS members and employers. The new rules won’t affect KP&F and Judges. The changes don’t officially take effect until July 1, 2016, but you may want to understand them now if you are nearing retirement.
You’re bound to encounter some roadblocks during your journey to retirement. But it’s important to stay the course because you’ll need more than just KPERS and Social Security for a secure retirement.
You might think waiting a few years to start saving won’t matter. The truth is, your first years of saving are the most important. The money you tuck away now will work for you the longest. Even small amounts, invested over time, can add up.
Paying down student loans, buying a car or saving for a down payment on a home are excellent goals. It’s easy to think you can get started on your retirement savings after you accomplish them. But there will always be immediate financial needs to tempt you to put off saving, even as you get older. Pay yourself first, and you’ll be thankful you did later.
One of the easiest ways to save is through an employer plan like a 457(b) deferred compensation plan or a 403(b) annuity. Ask your employer about what is available to you. State employees and many local employees can participate in KPERS 457, a 457(b) plan. It’s easy to get started with as little as $12 a paycheck.
Target Return = 8%
Total Assets = 17.08 Billion
Our actuarial projections assume an average, long-term investment return of 8 percent. In some years, returns will be below that rate, and in others, returns will exceed it. While investment returns each year are important, healthy returns over time are essential for proper funding. KPERS’ 25-year return is 8.7 percent*, exceeding the 8 percent target.
When most people think of KPERS, they think of retirement benefits. And rightly so. It is the largest part of our mission. But KPERS is also here to help public employees protect their income with life insurance while they are still working. It is our “quiet” benefit.
We served 250 families last year who lost a loved one with KPERS basic life insurance. While that number is small compared to the overall membership, it was important to those families. That makes it important to us.
The beginning of the year is a great time to review your financial situation and your life insurance needs. With KPERS, you are automatically covered by basic life insurance, worth 150% of your annual salary. Your employer pays the cost of this benefit, and it is free to you.
Some KPERS employers offer optional group life insurance coverage for both you and your spouse. This is additional insurance when you need more than just basic coverage. Check with your human resources department to see if your employer participates in optional insurance. You can find details about all of your benefits at www.kpers.org.
As always, we welcome your comments and questions. Please feel free to contact me anytime at 785-296-1019 or [email protected]. Happy New Year!
Contact KPERS: Phone 1-888-275-5737 or email [email protected]
Our Mission: In our fiduciary capacity, we exist to deliver retirement, disability and survivor benefits to our members and their beneficiaries.
The fiduciary standard is our driving force. That means we put the interest of our members first. It is the highest standard of care and accountability. A fiduciary relationship is highlighted by good faith, loyalty and trust.
Board of Trustees: Lois Cox (Chair), Kelly Arnold (Vice-Chair), Ernie Claudel, Shawn Creger, Ron Estes, Todd Hart, Christopher Long, Suresh Ramamurthi, Michael Rogers
Executive Director: Alan D. Conroy