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.