Filbrandt Reports

The 4 Employee Benefits You Must Replace When You Retire

Volume 19, Issue 5

Executive Summary:

In this report, you will learn:

  • The four most important employee benefits that will be up to you to replicate during your retirement
  • The importance of planning well in advance to replace these key benefits
  • How to avoid an unwelcome surprise at the bank if you need to apply for a loan in retirement
  • Why you may want to think twice about letting your group life insurance lapse after you retire

During the transition to retirement, university professionals will leave the protective umbrella of university employment and enter the world of self-employment.

It may sound curious, but when you consider your situation it will be remarkably similar to the life of a self-employed business owner.

You will need to pay yourself regular paychecks, maintain health and life insurance for you and your family, and you are the sole provider of your financial security for the remainder of your life.

In our experience, very few university retirees sufficiently replace the benefits provided by their university employment. This report will outline the four most important employee benefits you will lose when you retire from the university, and steps you can take to prepare now.


Guaranteed Paycheck

Tenured university professionals enjoy some of the most generous and secure incomes attainable. Replicating a similar income stream in retirement is significantly more complicated than during employment. Often retirement income is a combination of social security, cash savings, and distributions from retirement plans and outside brokerage accounts. The retiree must coordinate these several different sources of income in order to replicate their lost paychecks.

Unfortunately, many professors have no idea how to turn the assets they’ve accumulated over the years into a steady stream of income as reliable as a paycheck. And one they will not outlive. While social security can generally be relied upon for regular income, it is up to you to determine how you will generate income from your retirement accounts.

Mechanically, you will need to determine what investments you will liquidate in order to meet your income needs. Depending on the stock and bond markets, current tax laws, and your risk tolerance it may be to your benefit to be selective about what you sell for your income at any given time.

This is where independent financial adviser can play an important role, working with retirement plan vendors on a client’s behalf to create a reliable income stream that takes into account these many factors on a constant basis. Markets change, tax laws change, but you will still likely want the same amount of regular income regardless of these conditions. That’s why it is important to enlist the help of a qualified firm or individual to help you.

University professionals should be wary of advisors who suggest rollovers to brokerage accounts or annuities outside the university plan as a means to replicate their paychecks in retirement. In our experience, these methods are rarely in the best interests of the average university retiree.


One of the most jarring situations university retirees can find themselves in, is sitting in a bank’s office for a loan and being told they do not qualify due to lack of income. Perfect credit scores instantly lose their value once you have no income to report, regardless of how much money you have saved in your retirement accounts. Retirement accounts cannot be used as collateral for a loan.

We’ve seen many instances where a loan in retirement is needed – either as a short-term solution during a home relocation, to pay unexpected medical bills, or a buying opportunity like a new car or RV. It is advisable to address the loss of your creditworthiness by establishing a line of credit with the bank while you are still employed at the university. Further, it is important to assess any current loans you have, and if applicable, refinance at the best available rates prior to your retirement.


Health Insurance

University group health insurance plans are usually among the best available. Therefore, they are both difficult and expensive to replace. Employees who had been paying little to nothing for high-end health insurance will need to replace this benefit in retirement.

Some universities will allow participants to continue coverage, but the retiree typically must pay their own premiums, and the expense can be prohibitive. Private insurance plans can be purchased as well, but you should be aware that the costs will be higher as an individual than under group coverage.

Medicare is a coverage option for people age 65 and older, but it is important to understand the extent of coverage available through the government health care plan, and what out-of-pocket costs you may have. It may be very different from what you’ve become accustomed to as a university employee.

However you choose to furnish your and your family’s health insurance, it is important to take into account the added costs of health insurance premiums, and additional out-of-pocket expenses in your retirement budget. The cost may be much higher than you anticipate.

Group Life Insurance

Very few university professionals will replace their group life insurance, which in our experience can be a costly mistake. Your group life insurance policy is a valuable asset for your family, and it will disappear the day you retire. Regardless of how much money you have saved for retirement, or how well established your children may be, life insurance should always be a consideration in the financial planning process.

Think about it this way – if the university allowed you to keep group life insurance indefinitely and paid the premium for you, you certainly would not object. It is a reliable asset for the benefit of your family.

Life insurance policies can be extremely beneficial should you need long-term or end-of-life care, either as a funding source if cash is not available, or as a means to replenish spent assets to your family upon your death. Life insurance proceeds are also tax-free, so they are an ideal way to pass assets to your family.

While employed, life insurance can be easily acquired by simply signing up with the benefits office. There are no medical exams and insurability is guaranteed. The opposite is true after you leave the university.

University professionals who want to continue holding life insurance after retirement should begin shopping for their own life insurance policies well before retirement, preferably while the individual is still healthy and insurable. This will require a medical exam and an underwriting process, so the younger and healthier you are the more affordable your coverage options will be.


Take Action

The best step you can take now is to understand what benefits you have and establish a plan to replace them when you are no longer under the protective umbrella of university employment. As with the case of life insurance, the sooner in your career you plan for the loss of benefits the better off you and your family are likely to be. Working with an independent, financial adviser, alongside your university benefits office, can provide you with the security and peace of mind that you are truly prepared to retire from the university.

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Have a Question?

As part of our commitment to promoting financial literacy among university professionals, you can schedule a 15-minute phone call with an expert at Filbrandt & Company to learn how these important topics apply to your own situation.


Volume 19, Issue 5

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