The power of having a Tax-free retirement
"Tax-free retirement" has a nice ring to it. If, like two-thirds of Americans, you are unsure you've saved enough for your out years, it's especially nice to know that Uncle Sam won't be pinching a slice of your meager pie. Or maybe you're an ample saver convinced by the tax talk in Washington that the feds will undo your careful planning by raising taxes by the time you call it quits.
The life insurance retirement plan is another, more specialized, income-bearing product. Essentially a massively overfunded universal life policy, a LIRP allows the owner to withdraw the policy's excess cash tax-free and take loans tax-free.
What do I receve in Tax-Free retirement Strategy?
Death Benefit Protection
First, the death benefit protection is a given. This life insurance policy will last you for the remainder of your lifetime. It will also build up cash value.
Opportunity for Growth
Cash value component in the policy, gives you the opportunity to grow your funds based on a market-linked index, such as the S&P 500.
Protection of Principal
While there is the opportunity for additional growth of funds, there is also protection of your principal. When market downturn, your account is simply credited with a 0%. This not only protects your funds from loss, but also alleviates the need to make up lost ground from negative years.
Access to Funds
The cash that is in the cash value component can either be withdrawn or borrowed for any reason. This money can be used for paying off high interest credit card debt, personal loans, or even your home mortgage.
Supplemental Retirement Income, Tax Free
Becouse of the loan provisions, you can also use a policy's cash value to help in supplementing your retirement income. This can be especially beneficial if you are trying to fill an income gap and/or if you are under age 59½ and don't want to face the IRS early withdrawal penalty.
Protection from Creditors
In this policy cash values are also exempt from lawsuits and the claims of creditors.