Retirement Planning

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Life Insurance as an Alternative to a Non-deductible IRA – Reason #2: Diversifying Taxes on Retirement Income

The coming tax season is a perfect time to help your high-income clients assess the options available for their additional savings.

In a series of 6 back-to-back blogs we illustrate 5 key reasons why cash value life insurance can be a powerful savings vehicle when compared to other retirement income sources, especially a non-deductible IRA:

  1. Replacing the Post-Retirement Income Gap
  2. Diversifying Taxes at Retirement
  3. Cushioning a Market Downturn
  4. Guarding Longevity
  5. Maximizing Social Security

Today we flesh out Reason #2


Life Insurance as an Alternative to a Non-deductible IRA – Reason #1: Replacing the Post-Retirement Income Gap

 

The coming tax season is a perfect time to help your high-income clients assess the options available for their additional savings.

In a series of 6 back-to-back blog posts, we illustrate 5 key reasons why cash value life insurance can be a powerful savings vehicle when compared to other retirement income sources, especially a non-deductible IRA:

  1. Replacing the Post-Retirement Income Gap
  2. Diversifying Taxes at Retirement
  3. Cushioning a Market Downturn
  4. Guarding Longevity
  5. Maximizing Social Security

Today we flesh out Reason #1.


Life Insurance as an Alternative to a Non-deductible IRA? 5 Reasons Why

 
Planning for retirement income is a key priority for many pre-retirees between the ages of 40-65.

Social Security and employer-sponsored qualified plans may not provide sufficient income to replace a suitable portion of pre-retirement earnings. Once high-income earners reach their contribution limits to an employer-sponsored plan or an IRA, planning strategically for additional savings becomes critical.

Included in the planning process should be an assessment of all available savings vehicles and how the features of each compare to one another relative to:

  • deductibility of contributions
  • tax-deferral of growth
  • contribution limits
  • withdrawal rules and penalties
  • insurance charges
  • susceptibility to market risk
  • coverage for unpredictable healthcare costs

The question then becomes, which savings vehicles to use? Does a non-deductible IRA make sense? Maybe.

Might a cash value life insurance serve as a strategic alternative to a non-deductible IRA? It may.

The coming tax season is a perfect time to help clients assess the options available for their additional savings and to illustrate the flexibility and versatility of cash value life insurance to supplement retirement income.


5 Roadblocks to a Retirement Plan: Life Insurance Provides A Flexible Solution

The best laid plan requires a hedge. And this certainly applies to retirement planning.

Even if clients are saving enough for retirement, there remain 5 roadblocks to a well-intentioned retirement plan that need to be addressed:


Why Understanding Health Care is Essential for Retirement Planning

As we get older, the cost of health care invariably rises. This is creating major challenges for almost every American in one way or another.


Annuities and Retirement Planning

Retirees’ demand for more predictability and security in their retirement income has led an increasing number of financial advisors to look to annuities as way to provide more stability in their clients’ investment portfolios. They are also looking to annuities as a way to replace the third leg of the retirement income stool as a guaranteed lifetime income. Retirement planning occurs in different phases and at different stages of peoples’ lives. Depending on what stage of life a person is in, there is different kind of annuity that is best suited for their situation.


Are Clients Saving for the Future?

As generations change, so do the needs and fiscal behavior of the clients you see. Some clients have a great financial acumen and are able to properly execute discussed plans down to the last detail; however, as financial literacy becomes less popular in academia, we see a rising trend of consumers who focus on living day to day. While there is hope for a more prosperous future, there is rarely a plan in place to see it come to fruition.


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