With $1M in my 401(k) and 5 years to retirement, I’m unsure if canceling life insurance leaves my wife protected

Core Insights - The article discusses the financial considerations for Bob's wife regarding the inheritance of his 401(k) and the implications of life insurance in the event of his passing [1][5][6]. Group 1: Inheritance and Financial Planning - Bob's wife can withdraw a portion of the 401(k) as a lump sum without penalties, but it will be taxed as regular income [1]. - Bob has $1 million in his 401(k), and the couple needs to assess if this, along with Social Security benefits, will be sufficient for her living expenses if he were to pass away [2][5]. - The couple should evaluate their total budget, including mortgage payments and household expenses, to determine the adequacy of their financial situation [3]. Group 2: Life Insurance Considerations - Bob currently pays $150 a month for life insurance, which may provide a tax-free death benefit to his wife, useful for covering immediate expenses [4][6]. - The decision to maintain or cancel life insurance should consider whether Bob's wife would need the payout to cover debts or living expenses after his death [6][10]. - Different types of life insurance, such as term and permanent policies, have distinct implications for financial planning and should be evaluated based on the couple's needs [8][9][10]. Group 3: Long-term Care and Additional Costs - Long-term care expenses can be significant, with median monthly costs for home health aides and nursing homes being $6,483 and $10,646 respectively in 2024 [13]. - The couple may want to consider options like long-term care riders on permanent policies to help cover these potential costs [12]. - Consulting with a financial advisor is recommended to model different scenarios and make informed decisions regarding life insurance and retirement planning [14].