This calculator works out the shortfall your household would face if you died, after the pension survivor benefit, Social Security survivor benefits, the survivor’s own income and the assets you already hold. It answers it three ways rather than giving one number.
How much life insurance do I actually need?
Multiplying income by ten is a shortcut, not an analysis. This one works the other way: it starts from what the household would actually be short each year, then subtracts the pension survivor benefit, Social Security, the survivor’s own income, what you have already saved, and the coverage you already hold. It can return zero, and for a household with a large pension and a large balance it can.
Indicative, not a personal assessment. The figures above are arithmetic on what you entered, and they are a starting point rather than an assessment of your own circumstances. We can cover that in a short conversation.
This calculator uses no published figures. It is arithmetic on what you enter: the capital needed is the present value of the annual gap over the years you choose, at the real return you choose. That return is an assumption, not a projection. The reasoning behind each input is on the life insurance page.
How it works
The pension survivor election comes first
For a household with a PERS or TPAF pension, the survivor election is usually the largest single lever, and it is made once at retirement and cannot be changed afterwards. Electing a survivor option reduces the allowance for life in exchange for continuing payments to your spouse. Insurance is the alternative to that reduction, not an addition to it, and the comparison only works if you know both numbers.
That is why this tool asks what the pension pays the survivor before it asks anything about insurance. If the survivor benefit already covers the gap, the honest answer is that no policy is needed.
Three answers, not one
The three figures differ in what they assume about how long the money must last and whether the survivor keeps working. They will not agree, and the spread between them tells you how sensitive the answer is to assumptions you cannot verify today.
Questions
Common questions
Term or permanent?
A separate question from how much, and it turns on how long the need lasts. A need that ends when a mortgage is paid and a survivor allowance begins is a term-shaped need.
Is the payout taxed in New Jersey?
Proceeds paid to a named beneficiary are generally outside New Jersey inheritance tax, which makes insurance a different instrument here than in an estate tax state. See the inheritance tax calculator.
Check this against your own numbers.
The survivor election and the insurance decision are the same decision, and only one of them can be changed after you retire. We can cover it in a short conversation, at no charge and with no obligation.
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Booking is handled through Rosefinch Investment Advisors. North Jersey Retirement is not affiliated with, endorsed by, or sponsored by any government agency, retirement system, plan sponsor, or employer named on this site.