Gyroscopic Investing

I'm curious to know what people's thoughts are about life insurance in retirement (or very close to it). For this purpose I'm only referring to term insurance, not any other type that also serves as an investment.

Say you and your spouse have been working and investing for many years, the mortgage is paid (or close), college for your kids is paid for, etc. and you have a "decent sized" portfolio whatever that means to you. Nobody is going to starve or go homeless for quite some time if one of you dies.

Your retirement projections look good given what you know today.

However, there's not such a large portfolio that the "financial trajectory" of the survivors will remain unchanged if one of you dies earlier than expected. There would be the reduction of anticipated Social Security income, perhaps the loss of some part-time income, higher taxes for filing single, inheritances from in-laws that could bypass you or your spouse and go directly to your kids, etc.

Should you insure against those things? And if so, how do you determine how much insurance you need? Or should everyone just be on their own at that point?

A few random thoughts...

There's obviously no one-size-fits-all answer for this but I cancelled my life insurance last year (at age 64) with about seven years left on a 20-year term. My wife is almost 57 and still has hers. My premium was high(ish) at about $115 per month.

In our case our house is paid off and our one kid is through school with no debt and a good job.

We just feel that we have enough assets for sure for one person. Our biggest financial concern is longevity risk which the term insurance wasn't going to help with. But we'll also try to spend down and/or Roth convert some of our tIRA money in the next few years.

The flip side is that life insurance is technically more valuable later in the term because one has a higher risk of dying. And it's being paid for in inflated dollars. Of course the payout is less due to dollar inflation, but...

On your list, the higher taxes for the remaining single filer would be my biggest concern. So getting money out of tIRA and spent or into Roth might help. I say "might" because it sure does take a long time to convert a significant amount of tIRA money to Roths while also staying in a lower tax bracket.

The other thing for us is that we just didn't buy that much life insurance to begin with, so a payout wasn't going to move the needle so much in our case.