For many people, the only thing worse than talking about taxes is paying taxes. Sometimes, though, to avoid doing too much of the latter, you have to do the former.
Taxes take a big bite out of your working income and they also take a big bite out of your retirement income. Not even your Social Security benefits are safe from taxes. In fact, many Americans’ Social Security benefits are subject to federal taxes, thanks to the Social Security Amendments of 1983 and a second tier added in 1993. The Motley Fool reports that up to 85% of a beneficiary’s Social Security income can be exposed to federal tax, depending on one’s adjusted gross income level.
Tax-free income during retirement sounds good, doesn’t it? It’s even better if you’re able to grow your money in a tax-free way, and without the risk of losing everything. Fortunately, this isn’t an impossible dream. Life insurance can achieve these goals.
To see how life insurance can be used as a powerful retirement savings tool, watch this video.
As you’ve seen, life insurance isn’t just about making sure your family will be taken care of after your gone. It’s also a safe, tax-advantaged way of saving for your retirement.
Here’s a quick recap of some of the advantages that the right life insurance policy can provide.
- With a permanent life insurance policy, you can borrow against the death benefit. This income is yours to spend how you want, when you want. You don’t have to pay it back, either. Instead, the amount you borrow will be deducted from the death benefit.
- Life insurance benefits and withdrawals can be claimed tax free. This means you have more money in your pocket when you need it.
- You can pay more than the cost of insurance, a savings strategy that makes the most of your life insurance policy as an investment product.
- Indexed universal life insurance policies give you the best of both worlds – an opportunity to grow your money substantially plus the assurance that you won’t lose everything to whims of the stock market.
- The money you invest in your life insurance policy is typically safe against lawsuits, judgements and possibly even creditors depending on where you live.
Want to see if life insurance is the right savings tool for you? Schedule a financial planning appointment to learn more.
