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Two Lifelong Buddies…But Only One Had a Business Retirement Secret

Bill Jordon and Sam Franklin have been lifelong buddies since kindergarten. Legend has it the friendship began when Bill threw a building block at Sam’s head and Sam retaliated by pouring Elmer’s Glue into Sam’s shoes during naptime. Since then they’ve been close friends, regularly planning get-togethers with their wives and children. Yet at the same time, whether on the golf course or in business, they remained lifelong, but friendly competitors.

Over the past few months, Bill and Sam have been talking a lot about retirement. Bill’s business has grown to employ more than 30 people and has allowed Bill to take a decent salary for his entire career. One reason why Bill’s business has been so successful is that, since his business was founded, Bill has reinvested all the profits he could back into the business.

While this strategy has seen his business flourish, Bill has griped over the years about three frustrations:

  1. Each year, during tax filing season, Bill has demanded his CPA find a way to lower his tax bill, short of doing something illegal
  2. Bill’s business comprises almost 90% of his total net worth, a concentration his financial advisors have been trying to reduce to no avail
  3. Bill has not saved much for retirement, other than what is in his 401k.

Bill, now 66, wants to retire. However, the outside buyer he thought was going to buy his business has backed out. Bill will be forced to continue working unless he can find another buyer.

Over the years, Sam often commiserated with Bill. But Sam also decided to do something about it. He sought out several financial advisors, eventually following a strategy suggested to him 20 years ago. The advisor recommended Sam take part of his after tax profits and fund a cash-value life insurance policy. This strategy enabled Sam to carve out substantial value from his business and place it in a product that offered tax deferral and tax-free access to the cash value.

Sam can now retire at any time, unlike his kindergarten friend. Sam still commiserates with Bill, but also enjoys the quiet satisfaction of one-upping the kid who picked the fight in the first place.

For more information about how you can begin to start pulling equity out of the business and break the cycle of income taxation for business owners, please contact your Highland Capital Brokerage representative.


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We can show you how clients can extract value from the business on a regular basis, then invest the proceeds in a way that offers both tax deferral on the growth and tax-free access to the cash value in retirement. Click below to see how our solution works.

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