Retirement is one of life’s major milestones. Most people spend their younger years working hard so they can enjoy the benefits of retirement. As you near retirement, you may start to notice how many parts of life change when you leave the workforce behind. You probably have a new schedule with more free time or may have decided to move to a new city or neighborhood.
These changes represent an exciting time in your life. It’s easy to overlook some of the less exciting aspects of retirement. Insurance changes, in particular, are likely not at the top of your mind as you decide whether to take a vacation or start a new hobby. Use this guide as a quick reference to how your retirement may affect your insurance policies.
It’s not uncommon for a couple to retire and move to a new home. Whether you are looking to go to a new city or just want to downsize from a large family home, moving requires changes to your homeowners insurance. The existing policy on your current home will need to be canceled. Likewise, you’ll need to purchase a new homeowners policy when you buy your new house.
A smaller house may have a lower replacement cost and may cost less to insure. Be sure to give us a call and ask about potential insurance discounts. Your new home might have different features than the old house that can save you money. For example, your new home may have a burglar alarm system installed. This lowers your risk of intruders and theft and, in turn, lessens the insurance risk which can help lower your insurance rate.
If you plan to continue living in your current home and have paid off your mortgage, or are close to paying it off, this might be a good time to examine your current homeowner policy. Double check that your existing policy still meets your coverage needs. Over the years, you have probably collected jewelry, art, electronics and other valuables. The limits of a basic homeowners policy may not be enough to cover these more expensive items. Consider adding additional coverage to your homeowners insurance for these valuable items.
For retirees planning a move from a house to an apartment or another rental, it’s a good idea to purchase a renters insurance policy. As the name implies, renters insurance provides protection to your belongings when you live in a rental. Renters insurance also covers a surprising variety of other things in addition to your belongings, including some liability protection. Similar to homeowners insurance, expensive jewelry or antiques may not be covered within the limits of a basic renters policy. Make sure to check what is covered and add additional coverage for more expensive items as needed.
At retirement, most people don’t stop driving. This leads them to believe that there are no changes to their auto insurance. Car insurance, however, sees several notable changes when you retire. Car insurance rates typically factor in the amount you are driving each day. When you retire, your daily commute is often cut significantly. According to the Federal Highway Administration, the average American drives 13,476 miles per year. Older adults in retirement age typically drive much less. The average for adults over 65 years of age was merely 7,646 miles per year.
Fewer miles driven means you’re spending less time on the road. Your risk for being involved in a road accident decreases. Your lower risk of car accidents may mean a lower car insurance premium in retirement. Older drivers may also have access to exclusive discounts on car insurance. Contact us to see if you qualify for any discounts for mature drivers.
As retirement is a time of many changes, it’s a great time to go over your existing auto policy and make any updates necessary. Grown children who have their own vehicles and insurance policies no longer need to be listed on your auto insurance. Any vehicle that was used solely for commuting and you now plan to sell, donate or dispose of should also be removed from your policy. Update your policy to reflect that only current vehicles and drivers are listed. Some car enthusiasts use retirement as an opportunity to buy their dream car, whether that’s a classic muscle car or exotic sports car. If you plan to purchase a new car in retirement, make sure your policy has the right amount of coverage for the vehicle.
Age is a large factor in how your health insurance will change. People who retire under 64 years and 9 months old will need to keep their current health plan or purchase new health insurance. Some employers include health insurance coverage as part of their retirement packages. If your employer does not, you can search for health insurance through private insurers.
Retirees over 64 years and 9 months of age can utilize Medicare for insurance coverage. This federally-administrated health insurance program provides coverage for senior citizens. Besides age, Medicare enrollment eligibility requirements include at least 10 years of contributions to the Medicare program. This is represented in the Medicare tax taken out of your paycheck each month.
Planning for Insurance Changes in Retirement
Retirement comes with many exciting changes. Most retirees look forward to traveling, exploring new hobbies or enjoying more time with friends. As you prepare for the excitement of retirement, don’t forget to go over your insurance policies and begin planning for any changes you may need to make. Learn more about how car, renters and homeowners insurance policies are affected by retirement by giving us a call at 1-800-640-2920.