retirement

Downsize to retire comfortably

"What it's good for is covering your family to replace income, if you die, that you would have otherwise earned," he says. If you have a family with kids, it averts the disaster scenario, he says. But if you're retired and your kids have grown into productive members of the work force, you may not need it.

Investing in a cash-value policy shouldn't replace a savings strategy. If you're retired, it probably makes more sense to buy a term insurance policy to protect your spouse, although some advisers do recommend a combination of the two for pension maximization purposes.

CFP Bill Howell says he was able to free up thousands of dollars by converting a client's individual life insurance policy into one that satisfied the long-term needs of both spouses.

Get out of town  
Moving to an area with a lower cost of living or taxes can be a major money-saver. Some retirees are moving to urban locales, where they can ditch their cars altogether in exchange for cultural advantages and convenience. "I think you're going to see more seniors moving into urban areas where public transportation is available and the kinds of stores and things you need are readily available, too," says author Hebeler. An added health benefit is you can walk to most places.

College towns also draw retirees. CFP Stone sees a trend with some Cleveland-area retirees who are moving into places like the University Circle district near Case Western Reserve University in Cleveland. One benefit is that seniors can often sit in on classes at a significant discount, she says.

Bankrate's State Tax Roundup enables you to research target states to find those that are retirement-friendly.

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