Retirement Plans

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What if you could change your money from “forever” taxed to “never” taxed?

With ballooning annual deficits, unfunded liabilities, and entitlement programs, our country is probably headed toward stifling taxes in the future. Do you have a plan to deal with the possibility of tax increases that will be needed to pay for these programs?

Most individuals are focused during their working years on funding tax-deferred savings plans like IRAs and 401(k)s and fail to adequately prepare for the possibility that future taxes will rise. Generally, planners and advisors advocate that money should be placed in tax-deferred vehicles such as IRAs and 401(k)s now, during the working years, because they assume you will live on less in retirement. While this may be the case for the highest income earners, many will find that due to inflation in energy costs, healthcare premiums, and taxes, they may actually need more income during retirement to maintain their standard of living.

In addition, most Americans will rely to some degree upon Social Security to supplement their standard of living during retirement. If a retiree’s other income sources are taxable, then the portion of Social Security income that is taxable could rise to as high as 80%.

As part of your income strategy, we suggest that if you have the opportunity, you should make part of your income tax free. In other words, if part of your income in retirement comes from tax-free sources and never has to appear on your tax return, you will actually reduce your taxes on the rest of your income, including Social Security. Of course, the challenge is to find a financial vehicle that will allow you to accomplish this without sacrificing other important goals; we have discovered an innovative approach that combines a number of the following powerful features:

Principal protection

Market-linked growth

Tax-free accumulation

Tax-free access for major expenditures

Tax-free access for long term care

Tax-free access for retirement income

How Can I Receive Income Tax-Free?

Do you need extra cash to supplement your retirement income? How about to help pay for college expenses? Wouldn’t it be nice if these extra income sources were available to you on a tax-free basis? Life insurance, in addition to traditional coverage, offers a means to do this by allowing you to deposit significant amounts of money in addition to the minimum required premium to pay for the life insurance.

Imagine your premium being invested into 2 different accounts. The first is a small account, where the actual cost of the insurance goes to pay the premium. Once the money is deposited into this account, it is spent by the company to pay the actual cost of the insurance. The rest of the money goes into a type of “holding tank.” This holding tank is then invested into the life insurance carrier’s portfolio. By merging your money with millions of dollars from other investors, the insurance companies are able to achieve better, safer gains than any individual could achieve. In return, the carrier gives the consumer a piece of that interest, which is then credited back to the owner’s account as a growth in the cash value of the account.

There are two main ways that the policy holder can take money out of their account. They can make a withdrawal from the cash value at any time, which is subject to ordinary income taxes. However, most insurance policies offer the ability to take a loan from the policy because, according to the IRS, loans are not taxed and so these loans from the policy come out tax-free so long as all the funds are not withdrawn from the policy. The death benefit acts as a sort of collateral until the loan is repaid and, in case the loan is never repaid, the difference is simply subtracted from the death benefit and the difference goes to your beneficiaries tax-free!