MW 'Where are we vulnerable?' My husband and I are in our 50s. Our $450K mortgage is paid off. We have $500K in IRAs.

By Quentin Fottrell

'We will not be downsizing our home, but we do have rental income of about $1,500 per month'

"We are covered by health insurance under my husband's pension." (Photo subjects are models.)

Dear Quentin,

My husband, 55, and I, 58, both work. He has a pension that will bring $4,000 per month, starting in about a year, when he retires from his current position after 30 years. If something happens to him, I will receive the pension. After he retires, he will likely get another job, due to his age.

Our home is valued at $450,000 and the mortgage is paid off. Our children are all done with college and on their own. We have $500,000 in IRAs. Our only life insurance is through our jobs. That will go away when we retire. I don't feel there is a need to buy term-life policies.

I still plan to work for 10 years, and we will continue to max out on 401(k) contributions. We will not be downsizing our home, but we do have rental income of about $1,500 per month. We are covered by health insurance under my husband's pension.

What are your thoughts? Where are we vulnerable?

Wife & Mother

You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com, and follow Quentin Fottrell on X, the platform formerly known as Twitter.

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You are banking money as long as you both remain employed, particularly given that you are contributing to a 401(k) for the next 10-plus years.

Dear Wife & Mother,

You're doing pretty, pretty, pretty well.

There are possible vulnerabilities, but don't let them distract you from the bigger picture: You have a paid-off home, rental income, a pension (hopefully), kids who have flown the coop, health insurance and Medicare (when you turn 65, if you choose to take it), plus Social Security when you decide to take it.

What's more, you are banking money as long as you both remain employed, particularly given that you are contributing to a 401(k) for the next 10-plus years. With income taxes and the slow, inexorable rise in the cost of living, estimates for the amount needed to fund a comfortable retirement keep rising.

The biggest missing link from your letter is whether your husband's pension offers 50%, 75%, or 100% survivorship. Will you get $4,000 a month? Or $2,000 a month? These benefits could significantly impact your quality of life in retirement. That said, your projected retirement income, including Social Security, is likely to be higher than the U.S. average (currently around $55,000 a year).

Your retirement income will also be highly dependent on your pension's cost-of-living adjustment $(COLA)$, which varies significantly by policy, property-tax inflation, rising healthcare premiums, and whether your 401(k) savings rate will cover your anticipated expenses in retirement. Now for a hard truth: If his pension is frozen - and does not have a COLA - its real purchasing power could fall by 30%-40% over a 25-year retirement.

Some questions to consider: Will you be in a lower tax bracket after your husband retires? Would Roth conversions be optimal between retirement and age 73, or would required minimum distributions at 73 result in uncomfortably high taxes?

Don't get distracted

Real World Investor recently released research estimating that in 20 years, Americans will need $1.25 million in savings in order to retire comfortably. The data suggest that inflation, longer lifespans and a rising cost of living all play a role.

The 2025 Planning & Progress Study by Northwestern Mutual had similar findings. But please don't get distracted by these soundbites and surveys, they vary wildly from year to year, which does not add to their reliability as a fixed figure.

Your actual needs will always depend on your own spending, your pension, your Social Security, withdrawals from your 401(k) and the subsequent taxes and, last but not least, your longevity. There are two major risks for retirees: (1.) a market downturn early in retirement and (2.) being forced to draw from your investment accounts while markets are experiencing a downturn.

Northwestern Mutual recommends that people aim to replace around 80% of their preretirement income. "The actual 'magic number' calculation for each person will depend on things like when they want to retire, where they'll live, and what kind of lifestyle they want," it says

When you reach age 67 (or 70, if you want to maximize your benefits) you will also have Social Security benefits - the average overall payment currently hovers around $1,900-$2,1000 a month - and, perhaps, Medicare, which will further ease your financial picture in retirement.

We all have vulnerabilities

Your vulnerabilities lie, mostly, in unexpected health eventualities. That sounds like an oxymoron: We don't tend to expect illness or old age to create a problem in our life when we are young, but preparing for such eventualities is important.

Because you don't have a specific question, you would be better off sitting down with a certified public accountant or a trust and estates attorney. But since we're here - and because this may help other readers - you may wish to consider long-term-care insurance.

Alternatively, hybrid policies exist (life insurance with a long-term care rider) and/or you may wish to account for these potential costs down the road with home equity, retirement savings and your pension.

Another big decision that awaits you, one that continues to stump people entering retirement: Do you take Social Security at 67, your Full Retirement Age, or wait until 70?

Your Social Security benefit is based on your 35 highest-earning years. For 2025, the maximum a person can earn in the year is $176,100. Social Security taxes will not be withheld above this limit. The maximum possible monthly Social Security benefit for 2025 is $5,108, for someone who waits until age 70 to claim. Someone with that same benefit who claims at 62 in 2025 would receive $2,831 a month, the SSA says.

Healthcare eventualities

If you do decide to opt for long-term care insurance: The American Association for Long-Term Care Insurance says the mid-50s is the prime time for someone to take out long-term-care insurance. "Most consumers do not know they must 'health qualify' for long-term care insurance," the association says.

"There is a saying, your money pays for long-term care insurance, but your health buys it," the organization adds. "Your health is the single most important factor. As we age, our health changes, and once you reach your 50s it almost never gets better (even if you diet and exercise)."

"If you are 50, chances are that you leave your doctor's office with some new prescription in hand," it says. "That drug may help you live a long life. But it's those changes in our health that can make it harder or even impossible for you to 'health qualify' for long-term care insurance."

Premiums can rise significantly after purchase. The cost of long-term-care insurance effectively doubles between your 60s and 70s. It's more expensive for women due to their longer life expectancy (it costs around $524 a month for a single 65-year-old woman, versus $966 a month for a 75-year-old woman).

Life-insurance possibilities

You say you don't need term life. Term-life insurance is often unnecessary if you still receive pension income after your husband's death, your own income continues for 10 years after your husband's death and/or your assets exceed your remaining expenses.

For others, who may be considering this option, the average cost of a $500,000, 20-year term-life insurance policy - if you don't smoke and have few health conditions - is roughly $78 per month for a 50-year-old woman and $102 per month for a 50-year-old man, says Guardian Life.

Term life insurance is for a fixed period of time and does not have a cash surrender value. Whole-life insurance, on the other hand, does have a cash surrender value as well as lifetime coverage; for that reason, it's more expensive.

Most term life-insurance policies either simply expire at the end of the term or offer a conversion option to permanent life insurance; those renewal options, if they exist, typically need to be exercised before the policy expires.

No one is completely invulnerable, but you are in a solid position. That $4,000-a-month pension, with the aforementioned provisos, and $500,000 IRA and 401(k) will obviously help you - should something happen to your husband - maintain your current lifestyle.

Looking more closely at aspects of your finances, I have some questions. If you inherited your husband's pension, would you get a portion of it, or 100%? What housing costs, such as maintenance and insurance, do you face in the future, particularly for your rental property? Make space for insurance costs, repairs and the risk of vacancy if there's a downturn in the rental property market.

Job loss is another risk, but you have done well to lower your expenses by paying off your mortgage, especially given that housing is among our biggest expenses. The sweet spot for Roth conversions often comes after a person retires but before they claim Social Security.

We do our best to control the outcome.

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The Moneyist regrets he cannot reply to questions individually.

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December 12, 2025 19:01 ET (00:01 GMT)

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