Survivor Income Needs Calculator

Frequently Asked Questions

How much income will my family need if I die?

Most planners use 70-80% of pre-death household income for surviving family. Account for Social Security survivor benefits (averaging $1,773/month for a child in 2024 per SSA), but assume those end when children turn 18.

How long should survivor income cover the family?

Cover until the youngest child reaches financial independence (age 22-25), or until the surviving spouse reaches retirement age. A 30-year coverage horizon is common for young families with kids.

What investment return should I assume on insurance proceeds?

A conservative 4-5% real return (after inflation) is typical for survivor planning, reflecting a balanced 60/40 portfolio. The 4% safe withdrawal rule from Trinity Study research suggests $1M of insurance can sustainably generate $40,000/year.

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How This Calculator Works

This tool finds the annual income gap your survivors face: deceased income × replacement % − other household income. Rather than naively multiplying that gap by the years needed, it computes the present value of an annuity - the lump sum that, invested at your assumed return, would pay out that yearly need until it's exhausted. That present-value figure is the actual life-insurance death benefit to target, and it's meaningfully smaller than the naive total because the money keeps earning while it's drawn down.

Why 70% Replacement, Not 100%

Survivors usually don't need to replace 100% of income. The deceased's own consumption ends, certain costs fall, and a working spouse may continue earning. The 60–75% range is a common rule of thumb, but it's only a starting point - a stay-at-home parent who now needs paid childcare may need more than 70%, while a dual-income couple with no dependents may need far less. Adjust the percentage to your actual fixed obligations, not a default.

The Discount Rate Drives Everything

A higher assumed return shrinks the required lump sum - the capital works harder, so you need less of it.

Be conservative. Survivors often need stability, not equity risk; 3–5% is more defensible than 7–8% for money that must reliably pay rent.

This model assumes the principal is consumed over the period. To leave the principal intact (income in perpetuity), you'd need a much larger sum - roughly annual need ÷ return.

What the Calculator Doesn't Add (But You Should)

This is the income-replacement piece only. A complete needs analysis (often called DIME: Debt, Income, Mortgage, Education) also adds: paying off the mortgage and consumer debt, a college fund per child ($100k+ each is common), and final expenses. Conversely, subtract assets that already exist - current life insurance, savings, and especially Social Security survivor benefits, which can be substantial for young children and a surviving spouse.

Common Mistakes

Ignoring Social Security survivor benefits - they can replace a large slice of the gap and reduce the insurance needed.

Insuring only the breadwinner: replacing a non-earning caregiver's services (childcare, household management) is a real, large cost.

Buying a round number ("$1 million") instead of solving for the actual present-value need.

Forgetting inflation: a level income need over 20 years loses purchasing power - consider indexing the replacement amount upward.

Survivor Income Needs Calculator

Frequently Asked Questions

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