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November 03, 2008


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Another retirement mistake that I would say is not putting at least 10% of your annual income into your retirement account. If you fail to do this, you will end up retiring later than expected.

I can tell you why Life insurance is lumped in there. No matter what your age, you need a burial policy because it bypasses probate and comes to the beneficiary tax-free. Otherwise, your family is paying out of their pocket for your funeral, not from their inheritance. The only reason you shouldn't have life insurance is if you pre-pay your funeral.

On the other hand, you don't need disability insurance if you're retired. It wouldn't even pay out if you tried to claim on it because it goes into effect if you're out of a job.

Other than those things, I agree with this guy. It's a good idea to have safe investments that do better than inflation. It's a bad idea to over-spend. Self-insuring is a ticket to the poor house, especially in a Long-Term Care situation ($5000 per month is no joke, and that's on the low side for a Nursing Home).

I'm 28, I'm not putting 10% into a retirement account, and I will be able to retire in 10 years. Dig deep and research all of your options, don't just drink the government Kool-aid. Also check out some of the discussion on this page on 401k's last month.

Life insurance is a wonderful way to avoid the estate tax for large estates. If you are lucky enough to have a $10 million estate, You will pay almost $4 million in estate tax. If you use your $10 million to buy a life insurance policy with a face value of $10 million and hold it in an Irrevocable Life Insurance Trust, you will pass the full value of it on to your heirs/charity. Most people probably don't need it, but for the wealthy and future-wealthy that read FMF, keep this in mind!

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