Enter your family's expected monthly expenses
Enter the anticipated monthly expenses your survivors would incur in the event of
your death. A good rule of thumb is to base your estimate on 70% of your current
expenses. If you plan to repay all mortgage debts, do not include the monthly mortgage
payment here. Question #5 will address all outstanding debts.
Estimate your family's Social Security benefit
Although many families qualify for Social Security survivor benefits, it is not
advisable to rely solely on this income. Depending upon the age of the deceased
worker, their contribution to Social Security, and the makeup of their family, benefits
will vary. You can use the following tables to estimate Social Security benefits,
depending on whether you have children or not.
Tables I and II below show the approximate monthly benefit amounts payable to your
family members if you had died in 2000.
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Table I: Maximum Monthly Social Security Benefits
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Benefits for Families with Children Under 18
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Age of Worker
at Death
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Your Spouse
and One Child
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Maximum Family
Benefit Allowed
|
|
35
|
$2,760
|
$3,219
|
|
45
|
$2,728
|
$3,182
|
|
55
|
$2,606
|
$3,040
|
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Table II: Maximum Monthly Social Security Benefits
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|
Spousal Benefits Assuming No Children Under 18
|
Age of Worker
at Death
|
Spouse
Under Age 60
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Spouse
Age 60
|
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35
|
0
|
$1,315
|
|
45
|
0
|
$1,300
|
|
55
|
0
|
$1,242
|
Important Note: Once all children turn 18 or older, no Social Security benefits are
available until the surviving spouse is age 60. This is commonly known as the "Blackout
Period." Tables I and II have been extracted from Social Security Administration,
Understanding the Benefits, Publication Number 05-10024, February, 2001.
After all children turn 18, no Social Security benefits are available to the spouse
until the surviving spouse is age 60. Remember, these maximum benefits assume that
the deceased worker had paid the maximum in Social Security taxes annually during
their working lives.
Estimate pension or other retirement plan benefits
Please include any monthly distributions from qualified retirement plans that will
be distributed to your survivors in the event of your death, if it were to occur
today. If you anticipate receiving a lump sum distribution from a retirement plan,
enter that value into question #10. Please keep in mind that any distributions taken
from a retirement plan before the survivor is age 59 1/2 may be subject to early
withdrawal penalties as well as federal and state income tax.
Enter a hypothetical rate of return on invested death benefits
The following values can serve as a guideline for the hypothetical rates of return
associated with a particular level of investment risk.
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Conservative: 4%
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|
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Moderate: 6%
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|
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Aggressive : 8%
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Add final expenses/estate settlement costs
While these expenses may vary depending on your situation, typically they range
between $5,000 and $10,000.
Include mortgage balances & other outstanding debt
Assuming that you would pay off your mortgage balance all at once, be sure to only
include the remaining principal, not interest. Also include the full balance of
any automobile, educational, or personal loans. If you don't want the balance repaid,
be sure to include the monthly mortgage in #1.
Estimate your children's educational needs
Enter the total amount of capital your family would need to invest today to keep
pace with inflation in order to cover your children's future college educational
costs. According to the College Board, a non-profit scholastic service association
of high schools and colleges, the current average yearly costs of public and private
college as of 9/98 were $8,435 and $20,940, respectively. So, if your child wanted
to attend a private, four-year college, the total estimate in today's dollars would
be $83,760.
Enter how many months you would anticipate using an emergency fund
An emergency fund is designed to cover your family's regular monthly expenses (the
value you entered in Question #1) over the short-term period following your death.
Typically, this type of fund is designed to last between at least 3 and 6 months.
Cash/savings/securities/other liquid assets
Enter the value of all liquid (i.e., taxable) assets available (for use today),
either to pay final expenses or provide income for your survivors. Sources can include
savings accounts, securities, and mutual funds you can draw cash from without paying
a penalty. Lump sum distributions from retirement and pension plans should be entered
in Question #10.
Current life insurance coverage
Enter the total coverage of all existing personal and group life insurance proceeds
available to your family upon your death, if you were to die today.
Lump sum distributions from retirement plans
Include the net lump sum distribution from your qualified company-sponsored retirement
plans and IRAs that your family would need upon your death. If the surviving spouse
rolls over the full amount into a personal IRA, the input here should be zero.