Shortfall against your goal
If Steve died, the household would need $1,588,270 more, beyond the life insurance and savings in place today, in today's dollars.
If Steve died, the $250,000 of life insurance and $80,000 of savings you have would fall $1,588,270 short of full protection.
Steve's $250,000 term policy ends in about 10 years. Today the gap is $1,588,270; if this happened 10 years from now it would be about $1,282,982 in that year's dollars.
If Holly died, the household would need $1,731,356 more, beyond the life insurance and savings in place today, in today's dollars.
If Holly died, the $100,000 of life insurance and $80,000 of savings you have would fall $1,731,356 short of full protection.
Holly's $100,000 term policy ends in about 10 years. Today the gap is $1,731,356; if this happened 10 years from now it would be about $1,145,929 in that year's dollars.
When an adult dies, the income they earned and the work they did at home stop. The household's costs and plans don't.
How much money the household would need if one of you died, to meet the goal you chose.
How families protect against this. Life insurance protects the people who depend on you, and the income and work at home you provide. It turns a loss no family could save for into a set monthly cost, so the home, your family's plans and daily life can continue.
If one of you died, what should the household's resources do?
We include enough to bring savings up to your emergency-fund goal.
If the household cut back, we assume it could live on 80% of take-home pay (used in “Reduce the risk” below).
Steve's take-home of $7,000 a month would stop. The household's income would drop from $12,000 to $5,000 a month.
Spending would stay about $9,000 a month. The debts would not be paid off, so their payments would continue until each loan ends.
That leaves the household $4,000 a month short at first. After $20,000 of final costs, the $250,000 of life insurance and $80,000 of savings in place would run out in about 7 years 6 months. After that, the household could not cover its spending.
The $410,000 of debts would not be paid off and college ($447,031) would not be funded.
Full protection goes further than getting by. It means replacing Steve's take-home of $7,000 a month for 20 years, paying off the debts, paying for college and covering final costs. That is what the gap below measures.
Your goal: Support the household until the youngest child is 24 (20 years).
In place today: $250,000 of life insurance and $80,000 of cash and investments.
| + Steve's take-home pay that would stop: $7,000 a month for 20 years — the lump sum needed today to replace it | $1,405,767 |
| − Mortgage payment that ends when it is paid off: $2,212 a month for 20 years (the years of support you chose; the loan has 25 years left) | $375,171 |
| − Other debts payment that ends when it is paid off: $1,200 a month for 4 years 2 months* | $56,413 |
| + Mortgage paid off | $350,000 |
| + Other debts paid off | $60,000 |
| + College, at the estimated cost when each child starts, less college savings | $447,031 |
| Child, age 12: $23,340 a year today, rising 5% a year to $31,278 a year when they start in 6 years, × 4 years | $125,111 |
| Child, age 8: $23,340 a year today, rising 5% a year to $38,018 a year when they start in 10 years, × 4 years | $152,074 |
| Child, age 4: $23,340 a year today, rising 5% a year to $46,212 a year when they start in 14 years, × 4 years | $184,846 |
| Less college savings | − $15,000 |
| + Final costs | $20,000 |
| + Emergency fund: 12 months of spending after the payoffs (12 × $5,588 = $67,056), less the $30,000 of cash already set aside | $37,056 |
| = What full protection would take | $1,888,270 |
| − Life insurance in place today | $250,000 |
| − Savings in place: $30,000 of cash, less $30,000 kept as the emergency fund, plus $50,000 of investments | $50,000 |
| = The gap | $1,588,270 |
These amounts are what you'd need today, all at once. We assume the lost pay would have grown 2% a year, and that the money set aside earns 4% a year while it's paid out. A loan payment is only counted until that loan would have been paid off. We don't count retirement accounts or home equity. College is the estimated cost when each child starts (public, MN, rising 5% a year until then), less what is already saved.
* We estimated the years left on this loan from its balance and payment, leaving out interest. That makes the loan look a little shorter and the amount needed a little higher — so we err on the safe side.
Steve's $250,000 term life insurance ends in about 10 years. After that it won't help cover this.
If Steve died, the household would need $1,588,270 more, beyond the life insurance and savings in place today, in today's dollars.
This pays off the mortgage, as you chose. If you kept the mortgage and kept making the payments instead, the gap would be $1,696,073.
Figures in today's dollars.
| If it happened… | The gap then |
|---|---|
| Today | $1,588,270 |
| In 5 years | $1,393,475 |
| In 10 years | $1,282,982 |
| In 20 years (when Steve would be 65) | $149,117 |
These figures include future price rises. We assume costs go up 3% a year and savings keep up with prices, with nothing added. Each debt is paid down by its own payments until the loan ends. Paid household help stops when it's no longer needed. Life insurance through work stops counting at 65.
If Steve died: what the family would need vs what is in place
Holly's take-home of $5,000 a month would stop. The household's income would drop from $12,000 to $7,000 a month.
Spending would stay about $9,000 a month. The debts would not be paid off, so their payments would continue until each loan ends. The household would also pay $2,500 a month for the household help Holly provides.
That leaves the household $4,500 a month short at first. After $20,000 of final costs, the $100,000 of life insurance and $80,000 of savings in place would run out in about 3 years. After that, the household could not cover its spending.
The $410,000 of debts would not be paid off and college ($447,031) would not be funded.
Full protection goes further than getting by. It means replacing Holly's take-home of $5,000 a month for 20 years, paying for the help Holly provides, paying off the debts, paying for college and covering final costs. That is what the gap below measures.
Your goal: Support the household until the youngest child is 24 (20 years).
In place today: $100,000 of life insurance and $80,000 of cash and investments.
| + Holly's take-home pay that would stop: $5,000 a month for 20 years — the lump sum needed today to replace it | $1,004,119 |
| − Mortgage payment that ends when it is paid off: $2,212 a month for 20 years (the years of support you chose; the loan has 25 years left) | $375,171 |
| − Other debts payment that ends when it is paid off: $1,200 a month for 4 years 2 months* | $56,413 |
| + Mortgage paid off | $350,000 |
| + Other debts paid off | $60,000 |
| + College, at the estimated cost when each child starts, less college savings | $447,031 |
| Child, age 12: $23,340 a year today, rising 5% a year to $31,278 a year when they start in 6 years, × 4 years | $125,111 |
| Child, age 8: $23,340 a year today, rising 5% a year to $38,018 a year when they start in 10 years, × 4 years | $152,074 |
| Child, age 4: $23,340 a year today, rising 5% a year to $46,212 a year when they start in 14 years, × 4 years | $184,846 |
| Less college savings | − $15,000 |
| + Paying for the household help Holly provides ($2,500 a month for 14 years, as a lump sum needed today) | $394,733 |
| + Final costs | $20,000 |
| + Emergency fund: 12 months of spending after the payoffs (12 × $5,588 = $67,056), less the $30,000 of cash already set aside | $37,056 |
| = What full protection would take | $1,881,356 |
| − Life insurance in place today | $100,000 |
| − Savings in place: $30,000 of cash, less $30,000 kept as the emergency fund, plus $50,000 of investments | $50,000 |
| = The gap | $1,731,356 |
These amounts are what you'd need today, all at once. We assume the lost pay would have grown 2% a year, and that the money set aside earns 4% a year while it's paid out. A loan payment is only counted until that loan would have been paid off. Paid household help is counted rising 3% a year. We don't count retirement accounts or home equity. College is the estimated cost when each child starts (public, MN, rising 5% a year until then), less what is already saved.
* We estimated the years left on this loan from its balance and payment, leaving out interest. That makes the loan look a little shorter and the amount needed a little higher — so we err on the safe side.
Holly's $100,000 term life insurance ends in about 10 years. After that it won't help cover this.
If Holly died, the household would need $1,731,356 more, beyond the life insurance and savings in place today, in today's dollars.
This pays off the mortgage, as you chose. If you kept the mortgage and kept making the payments instead, the gap would be $1,839,159.
Figures in today's dollars.
| If it happened… | The gap then |
|---|---|
| Today | $1,731,356 |
| In 5 years | $1,479,125 |
| In 10 years | $1,145,929 |
| In 20 years (when Steve and Holly would be 65) | $149,117 |
These figures include future price rises. We assume costs go up 3% a year and savings keep up with prices, with nothing added. Each debt is paid down by its own payments until the loan ends. Paid household help stops when it's no longer needed. Life insurance through work stops counting at 65.
If Holly died: what the family would need vs what is in place
Each one shows how your result would change if something were different. They are not advice about what you should do.
Try your own what-if
If Steve died 10 years from now
The gap would be about $1,282,982 in the dollars of that year.
Steve: keep the mortgage instead of paying it off
The gap would go up by $107,803, from $1,588,270 to $1,696,073. See it on its own
Holly: keep the mortgage instead of paying it off
The gap would go up by $107,803, from $1,731,356 to $1,839,159. See it on its own
This would make your result more accurate.
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