I agree with the idea to “enjoy life” in addition to saving.
You don’t want to focus so much on saving that life passes you by, but you do want to have some savings goals and meet them.
You also don’t want all of savings to be in retirement funds at that age, because there may be houses to buy, day care to fund, etc.
My kid does “enjoy life.” But he likes video games (cheap), foreign travel (not possible right now, but he made a point of meeting up with girl friend now wife when he could). He was actually a master of getting other people to pay for travel. (His wife has been doing the same via grants for dissertation research!) He likes to read. He has a used Prius and likes it. He and his wife like hiking. At his age, I also found saving really easy. It’s harder once you have kids.
Which Fidelity mutual fund is this?
Problem with permanent life insurance is the costs that are often difficult to understand/determine. Buy term life insurance and you know exactly what you are getting and for how long. Invest money and you will see the costs. permanent life insurance is a hybrid making it challenging to figure out the costs/return. Policies I have seen have had mediocre returns at best and sometimes lousy returns. I am forced to buy permanent policy through work and have always selected the minimum required and the rest in term. Other people have different views.
I think it makes sense to ladder term policies. You won’t need the same level of coverage throughout your life. You can get a 20 year policy and 10 year policy at the same time. Gives you higher coverage for the first 10 years and reduced coverage for the last. Your savings should grow during that time (mortgage gets paid down increasing equity) and the required replacement income should decline. Life events can alter that. With grad school approaching for my daughter I got an additional 10 year policy to cover those costs.
@saillakeerie YES!! laddering policies is a great idea. We added quite a bit over the years. Now, we have policies that will expire in ten years ( or less ) but we won’t need them so won’t get a new one. I never understood folks who don’t have life insurance. It’s so cheap relative to the outcome.
How about people who have no one financially dependent on their labor or existence? Do such people have any need for life insurance?
@ucbalumnus Yes, that is true. Guess in that case it would still be nice to have a small policy they can leave to their alma mater or something they cared about? But I guess they might have that covered elsewhere.
Guess I was thinking primarily about people who need life insurance but don’t buy it because they think they can’t afford it.
For specific needs absolutely makes sense and I do that to. However, permanent life coverage is the only way to ensure your coverage is in force the day you die. All kinds of reasons to have coverage once the mortgage is paid off, both personally and for a small business owner. Not even talking about cash value (of which I’m a fan and have lots of - used it to pay college costs tax free, doesn’t factor into fin aid calcs or SS taxation, etc.) The actual death benefit. I want my spouse to receive X when I pass, period. Least expensive way to guarantee that happens.
That’s called spend and replace. I don’t have to have a nest egg of $X to last our lifetimes, I just need it to last mine. I pass and then she gets another nest egg. It’s guaranteed and it’s tax free. Investment are neither.
So a blend of term and perm works well. Oh and BTW, if Dave Ramsey says he doesn’t own a ton of permanent life insurance for estate planning purposes, he’s either lieing or he’s stupid as he’s worth well over 100M. He may have set up all these convoluted trusts and family limited partnerships to get rid of assets but that could cost more than the coverage and requires so many hoops and maintenance. Just write the check Dave (I’m sure he did for like 50M of coverage - he could finance the premium to get even more leverage.)
Also, for your kids, yah, maybe they don’t yet need life insurance, but it is pretty cheap in your twenties and thirties, if you get preferred best rates, but stuff happens, life happens. It is pretty easy to no longer qualify for best rates. It’s not a big deal to get it when you are out of school and have a job, get a 30 year $1MM policy and lock in that best rate, it’s cheap protection.
At this point, it is more of meta-insurance, where one buys insurance for future insurability of the desired insurance that may be needed in the future. However, that also means paying for the actual insurance (as well as the meta-insurance) now even if it is not needed now.
Not everyone needs or wants life insurance in effect on the day they die. Some do and they should have it. But if you don’t why have it?
Making it sound like permanent life insurance gives you benefits for nothing. Thats not true. You are paying for it and the insurance companies are making money on them. Brokers are making money on investment accounts. Mutual fund managers are too. But you can see what those costs are. Much much difficult to understand the costs of permanent life insurance.
Needing to replenish nest eggs when you die for your spouse isn’t always needed. Much more of an issue with larger age gaps between spouses.
Many companies have a basic life insurance policy for their employees as a benefit and let you add supplemental insurance for extra payments. I have never purchased any life insurance outside of this. My 26 year old daughter recently changed jobs and she got the basic plan for free (I did not suggest she get any additional insurance at her age). Before he retired, we did get supplemental insurance from my husband’s employer (as he was the major breadwinner for the family).
We have always been big savers and consider putting money away the most important thing for a secure financial future.
If your life insurance is tied to your job, you lose it if you lose your job or change jobs. In addition, once I checked, at 40+, supplemental life insurance through the Megacorp plan was significantly more expensive than getting term life insurance on my own. So we accepted the minimum coverage provided by Megacorp as part of their standard package, and bought separate policies to span the time through youngest kid’s college graduation and a little past.
I do think life insurance for both parents is important until your nest egg is big enough and all your major expenses are behind you. Keeping life insurance after that kind of feels like a macabre lottery game, where your family “wins” a big payout if you check out early.
I had a good friend who considered life insurance and decided not to purchase any, a few years later she died, in her 50s, of cancer. Almost immediately her college aged kids had a GoFundMe page up. I wish she’d bought the life insurance instead of having to depend on the kindness of strangers.
No one should profit from my death. We terminated life insurance when our son turned 18.
The life insurance theme is sort of derailing the thread, although it is important even for young people. Sorry if I contributed to that. Someone brought up Dave Ramsey and that got me going…
Anyway, lots of reasons to have life insurance, both term and perm. Small business ownership opens up even more reasons (secure loans, succession planning, bonus compensation, etc.)
Have met way to many people that are either uninsured or underinsured (most simply counting on their employee benefits which are neither sufficient or portable).
And life does happen (to lots and lots of people, including me), so get coverage when you can get better rates. Wish I had another mil or two to help pay for future grandkid’s college.
Investing…
Time in the market, diversified allocation based on risk tolerance, dollar cost average, rebalance, pay yourself first, spend way less than you earn / live beneath your needs.
Do that for 30 -40 yrs and you’ll have millions. At that point you may not NEED life insurance, but you might still WANT some! (Had to throw that in 
)
What is the scenario where a retiree with millions of dollars would want life insurance?
Just the question a life insurance salesman would want you to ask. Nice set up.
My advice to my kids is to buy term when they start considering a family, and to avoid permanent insurance. Even though there are some edge cases where permanent is sometimes useful.
Also my advice is to get used to losing money now and then. This spring hurt, I told them how much their parents were down in late March and that we weren’t changing course because we had been there before.
We haven’t yet had to have the conversation about how to think about a potential partner with significant college debt. Probably we shouldn’t no matter what.