Diversification in retirement planning is key and as the tax picture continually changes, proper planning in retirement is key to a successful retirement for many clients. Life insurance is uniquely qualified to take advantage of tax laws to provide certain clients with a product that is funded with after -tax monies, but will grow tax deferred and if structured properly, can provide a supplement to retirement income tax-free.
We use strategies that have the same characteristics as a Roth IRA, but without the contribution limitations and with the ability to instantly create a legacy for an individual’s loved one should they die prematurely.
A Male 50 could contribute $1,000/mo for 15 years and could receive a projected annual income of over $21,600 tax free ($30,800 taxable equivalent assuming a 30% tax bracket) paid for 20 years – that is an internal rate of return of over 5.20%*.
Properly designed life insurance can assist clients in retirement and weather the ups and downs of market performance – otherwise referred to the concept of “Sequence of Returns”. Wealth advisors are utilizing life insurance as another “bucket” of assets to provide for the tax free income in supplementing retirement and avoiding the need to liquidate assets in a down market.
Foundational Planning Group works very closely with advisors and their clients to analyze and identify if life insurance has a place in retirement planning. We will ensure that the concepts are fully understood, and that risks and benefits are outlined before implementation. Lastly, we will coordinate with all other planning strategies and if possible combine insurance protection needs with multiple planning expectations.
*Preferred Non-Smoker; Male age 50; John Hancock Accumulation IUL 17; $1,000/mo premium paid every month to age 65 at an assumed crediting rate of 6% (based on the S&P 500 Index) illustrated March, 2018. Please refer to John Hancock illustration for important information.