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Retirement Planning

A case study illustrating how an indexed universal life insurance policy can supplement traditional retirement savings vehicles.

A couple was just entering their 50s and found a lot of their discussions were starting to focus on their retirement.  They began to look at both their savings and their anticipated work income until retirement to make a plan.

THE CHALLENGE

The couple both planned to work until age 67 so they could receive their full social security benefits.  Additionally, the husband had been contributing to his 401k and the wife to an IRA.  Although they felt good about their money they had saved over the years, the college tuition they paid for their 2 children left their savings depleted.  They believed if they wanted to pursue the active retirement they envisioned they would need extra financial resources in addition to the retirement savings plans to which they were already contributing the maximum amount to.

THE SOLUTION

An Indexed Universal Life Insurance Policy purchased on both the wife and the husband, naming each other as beneficiaries and the children as contingent beneficiaries will protect their future and help them create the potential to supplement their retirement income.

Each indexed universal life insurance policy was funded with the maximum premium (stopping short of the point where withdrawals become taxable as a modified endowment contract or MEC).  This will help them generate additional cash value and could later be borrowed tax-free to supplement retirement income.

Husband’s Policy
Face Amount $250,000 death benefit, $13,218 annual premium.
Projected income at age 67 per year for 15 years is $36,732 based on past market performance (obviously there is no guarantee the product will perform as projected).

Wife’s Policy
Face Amount $250,000 death benefit, $9,730 annual premium.
Projected income at age 67 per year for 15 years is $26,524 based on past market performance (obviously there is no guarantee the product will perform as projected).

The projected income amounts above would allow the policy to stay in force until age 82.  The death benefit would be reduced by any prior loans and accumulated interest incurred during the 15-year payout period.

The death benefit plus the supplemental income from the indexed universal life insurance policy, combined with income from social security and their other retirement assets would: (A) satisfy their income needs, (B) postpone the necessity to withdrawal the principal from their 401k or IRA thus deferring taxes a number of years, (C) provide a death benefit to help further augment the survivor’s retirement income in the event either dies prior to retirement, and (D) provide the potential to leave a legacy for their children when both ultimately pass away.

This is how we can help all of our clients across 26 states.  Give us a call or contact us now to set up your needs analysis to determine just what you’ll need in your retirement years.

 

 

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