In short
- 'Will I run out of money?' has no finish line. 'How much legacy will I leave?' gives you something to plan toward.
- Planning for legacy means protecting savings from health care costs and long-term care first.
- The IRS generally doesn't count life insurance paid to a beneficiary as income, while inherited traditional IRA withdrawals are generally taxable.
- In 2023, the average 65-year-old could expect about 19.5 more years, so plan for a long retirement.
I can't predict the end. If I could, man, I wouldn't be selling insurance. I'd be sitting at the Zoltar kiosk at the county fair, charging $10,000 or $100,000 a pop.
Since nobody can tell you when the end is coming, the most common retirement question I hear is one nobody can actually answer.
What's the wrong retirement question?
The number one concern people bring to my table is this: am I going to run out of money before I die?
It's not a dumb question. It's a scared one. And it keeps you playing defense for 20 or 30 years.
The trouble is that it has no finish line. You can't answer it without knowing how long you'll live, what your health will do and what prices will do, and nobody knows those things. So people keep worrying, keep checking the balance, and sometimes keep spending less than they could on the things they retired to do in the first place.
What's the right question?
My goal is to switch that from "am I going to run out of money before I die" to "how much legacy am I going to leave for my family?" And that's an entirely different conversation.
It sounds like a small change. It isn't. When the question is legacy, you're planning on there being something left, and you're planning on purpose to protect it. We stop asking "Will it last?" and start asking "What has to go right for it to last, and what do I want it to do when I'm gone?"
Why does the legacy question change the plan?
Because it makes you look hard at the things that drain money, and at where the money sits. When we start from legacy, the plan usually picks up four steps:
- We write down who the legacy is for. Kids, grandkids, your church, whatever matters to you. A number with a name on it is easier to protect.
- We protect it from health care costs. That's the piece I know best. Medicare costs money: the standard Part B premium is $202.90 a month in 2026, and covered Part D drug costs can run up to $2,100 out of pocket in 2026 and $2,400 in 2027 before the yearly cap stops them. A plan that fits your medications and budget keeps more money in the account.
- We plan for long-term care. Medicare and most health insurance, including Medicare Supplement plans, don't pay for non-medical long-term care. What happens if myself or my significant other ends up in long-term care? That question deserves an answer before it happens. Start with does Medicare pay for nursing homes, then long-term care insurance in Nebraska.
- We look at where the money sits. Some things, when they get inherited, get taxed. Some things don't.
Which things get taxed when they're inherited?
It depends on the account. That's exactly why I bring it up, and exactly why I send you to a tax professional for the details. I'm not an accountant.
A few general rules from the IRS are worth knowing before that conversation:
| What your family inherits | The general IRS rule |
|---|---|
| Life insurance death benefit | Generally not counted as income to the beneficiary. Any interest paid on it is taxable. |
| Traditional IRA or employer retirement plan | Beneficiaries include taxable distributions in their gross income. |
| Roth IRA | Withdrawals of contributions aren't taxed. Most withdrawals of earnings aren't either, unless the account is less than 5 years old. |
That's one reason life insurance comes up when we talk about legacy. If you're weighing the types, term vs whole life insurance for retirees is a good next read.
How long do you need to plan for?
Longer than you think. It's not unusual to see people that work for 40 years, retire at 60 or 62, and then live till 90. The retirement phase is almost as long as the accumulation phase.
The numbers back that up. According to the CDC, a 65-year-old in the U.S. could expect about 19.5 more years on average in 2023: 18.2 years for men and 20.7 for women. That's an average, so plenty of people go well past it. Am I going to live to 90? Heck, I don't know. But I'd rather plan like you might.
If you retire before 65, add the years before Medicare starts. Those years need their own health coverage, and the cost surprises a lot of people, especially if you take expensive medications. That's covered in health insurance if you retire before 65.
How do I help with this if I'm not a financial planner?
I'm a licensed life and health insurance agent. I'm not an accountant, a tax preparer or an investment adviser, and I'll tell you that up front.
What I do is the insurance side of the legacy question:
- Get your Medicare coverage right, so health costs don't eat the savings. Every fall we review it again, because plans change every year.
- Look at life insurance if leaving money is part of the plan, or final expense coverage if the goal is keeping funeral costs off your kids.
- Ask the long-term care question out loud, so it doesn't get skipped because it's uncomfortable.
- Point you to a tax or financial professional for taxes and investments.
What can you do this week?
Three things, and none of them need me:
- Write down your answer to the legacy question. Who, roughly how much, and why.
- List your accounts by type: savings, traditional IRA or 401(k), Roth, life insurance. Ask your tax preparer how each one is treated when it's inherited.
- Check the beneficiary names on every policy and account. Life changes. Forms don't update themselves.
When you want to talk it through, sit down with me. My help costs you nothing, because the insurance companies pay agents. For unbiased Medicare help, Medicare.gov, 1-800-MEDICARE (1-800-633-4227, 24 hours a day, 7 days a week; TTY 1-877-486-2048) and Nebraska SHIP (formerly SHIIP) at 1-800-234-7119 are good places to start too. Then we can quit worrying about running out and start planning what you're leaving.
Frequently asked questions
Legacy planning means deciding what you want to leave behind, and for whom, and then planning your retirement so that money is protected. It covers the obvious things like savings and life insurance, but also the costs that can drain them, such as health care, long-term care and taxes. Bill Jurey handles the insurance side and leaves taxes and investments to your tax and financial professionals.
Generally, no. The IRS says life insurance proceeds you receive as a beneficiary because the insured person died generally aren't included in your gross income, so you don't report them. The exception is interest. If the payout earns interest before you receive it, the interest is taxable. Some situations, like a policy that was sold or transferred for money, have different rules, so ask a tax professional about your case.
Usually, yes, for traditional accounts. The IRS says beneficiaries must include taxable distributions from inherited IRAs and retirement plans in their gross income. Inherited Roth accounts work differently: withdrawals of contributions aren't taxed, and most withdrawals of earnings aren't either, unless the Roth account is less than five years old. Because the rules depend on the account and the beneficiary, talk to a tax preparer before you make decisions.
Longer than most people expect. According to the CDC, a 65-year-old in the U.S. could expect to live about 19.5 more years on average in 2023, with men at 18.2 years and women at 20.7. Because that's an average, many people live well past it. If you retire at 60 or 62, add those years too, plus the cost of health coverage before Medicare starts at 65.
A licensed life and health insurance agent can help with part of it. Bill Jurey makes sure your Medicare coverage fits your medications, doctors and budget so health costs don't drain savings, and he can help with life insurance if leaving money is part of your plan. He is not an accountant, tax preparer or investment adviser, so taxes and investments belong with those professionals.
Sources
- IRS: Life insurance and disability insurance proceeds (opens in a new tab)
- IRS: Retirement topics, beneficiary (opens in a new tab)
- CDC National Center for Health Statistics: Mortality in the United States, 2023 (opens in a new tab)
- Medicare.gov: Part D costs (2026 and 2027 out-of-pocket cap) (opens in a new tab)
- Medicare.gov: Long-term care coverage (opens in a new tab)
- Medicare.gov: Medicare & You 2027 handbook (2026 Part B premium) (opens in a new tab)
