Do Washington Public Employees Really Need Life Insurance in Retirement?

Note: The examples and case studies in this article are hypothetical but represent real situations I have encountered in my practice working with Washington State public employees.
The Question That Stops Most Retirees
I was reviewing a retirement plan last month when my client said something that caught me off guard.
"I'm paying almost $400 a month for life insurance. My advisor told me I'd need it forever."
He's 58, a city employee with 26 years of service, planning to retire next year. His kids are in their 30s and independent. His house is paid off.
And he's still writing that check every month.
What I've Learned Working With Retirees
Most people think about life insurance the wrong way once they retire.
They think the question is "Do I still need life insurance?"
But that's not actually the question.
The real question is: "What am I protecting against?"
When you're working and raising kids, the answer is clear. You're protecting your family's income. Your mortgage payment. College expenses. The life you're building together.
But in retirement? The entire picture changes.
The Problem with His Policy
His $400 monthly premium was for a universal life policy he'd bought 15 years ago. The death benefit was $500,000.
We walked through what would happen if he passed away tomorrow.
His wife would receive his survivor pension benefit from PERS 2¹. She could receive Social Security survivor benefits based on his earnings record, though she'd get the higher of either her own benefit or his survivor benefit, not both². Their house was paid off. Their kids were independent.
She'd actually be fine financially.
The $500,000 death benefit would just be extra money sitting in an account. Money that cost him $4,800 every single year to maintain.
How Washington State Employee Benefits Change the Calculation
Here's what most public employees don't realize about their retirement benefits.
Your DRS pension includes survivor benefit options¹. When you retire, you can choose to have a portion or all of your pension continue for your spouse after you die. This is built into your benefit structure.
Social Security also provides survivor benefits². Your surviving spouse can receive a benefit based on your earnings record. However, they receive the higher of either their own benefit or the survivor benefit, not both.
These two income sources often cover most or all of your spouse's essential expenses in retirement.
This is fundamentally different from private sector employees who rely primarily on 401(k) savings. Washington State public employees have guaranteed income sources that can continue after death.
Three Situations Where You Might Still Need Life Insurance
Life insurance in retirement isn't always unnecessary. Here are three situations where I consider it:
You Have a Survivor Benefit Gap
This is the big one. If you chose the single life pension option for maximum monthly income, your pension stops completely when you die¹.
Zero. Nothing. Gone.
Your spouse would be left relying entirely on Social Security and investment accounts. This is an enormous financial risk if your spouse depends on that pension income.
Life insurance can bridge this gap during your early retirement years, providing income replacement until your investment accounts can sustain withdrawals or your spouse reaches full Social Security retirement age.
You Have Dependent Children or Special Needs Dependents
If you have minor children or adult children with special needs who depend on your income, life insurance provides essential protection. The Social Security survivor benefit for children generally continues until age 18³.
For special needs dependents, permanent life insurance might be appropriate as part of a comprehensive plan.
You Want to Leave a Specific Legacy
Some people want to leave money to children, grandchildren, or charities. If your retirement accounts and other assets don't provide the legacy you want, life insurance can fill that role.
But here's the key question: Is that legacy worth the annual premium cost?
What He Decided to Do
We ran the numbers together.
With his 100% joint survivor option, his wife would receive a continuing pension after his death¹. The exact percentage depends on which survivor option he selects at retirement. She'd also have Social Security, receiving the higher of either her own benefit or his survivor benefit². Plus access to their $650,000 in savings.
Her income would drop, but their expenses would drop too. One person eats less. Travel costs less. Healthcare through PEBB would continue.
She'd be comfortable.
He cancelled the policy after our analysis. That freed up $4,800 per year he could actually use now.
How to Think About This for Yourself
Here's the framework I use with clients:
Add up your spouse's guaranteed income if you died tomorrow. Include survivor pension benefits and Social Security survivor benefits (remember, they get the higher of the two benefits, not both).
Compare that to their estimated expenses. One person typically spends less of what a couple spends.
If there's a significant gap, calculate how much insurance fills it. Then get term insurance quotes.
If there's no gap or your investment accounts can cover it, you probably don't need life insurance.
The Cost of Keeping the Wrong Policy
Life insurance in your 50s and 60s gets expensive.
That's money you could use now. Traveling. Helping your kids. Building your investment accounts.
What About Final Expenses?
Final expenses can be very expensive….but how expensive?
If you have been a diligent saver, you can likely cover these expenses with your savings.
But you don't need $500,000 of coverage for final expenses.
Here's What to Do This Month
Pull out your life insurance policies. All of them.
Look at the death benefit amounts and the premiums you're paying.
Then calculate what your spouse would actually receive from your DRS pension survivor benefit¹, Social Security survivor benefits² (the higher of the two), and retirement accounts.
Ask yourself: Is this insurance still protecting against a real financial risk? Or is it just a habit from when your situation was different?
If you're not sure, that's exactly the kind of analysis I help clients work through.
Your retirement is about living well now while being smart about the future, not paying for protection you no longer need.


Sources

1. Washington State Department of Retirement Systems. "Beneficiary information." February 29, 2024. https://www.drs.wa.gov/sitemap/beneficiary/​
2. Social Security Administration. "Survivor benefits." https://www.ssa.gov/survivor​
3. Social Security Administration. "Benefits for Children." https://www.ssa.gov/pubs/EN-05-10085.pdf