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Many high-income earners
contribute the maximum

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to their employer provided
retirement plan every year,

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yet are still not confident they
will have the retirement income

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to maintain their desired
standard of living.

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They may also be concerned

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that their retirement
income will keep them

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in the top tax bracket.

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A strategy incorporating life
insurance could be the answer.

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Though best known for helping
meet death protection needs,

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due to its unique tax treatment,

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life insurance can also provide
an additional way to save

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for retirement, through
tax-deferred growth

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of its cash value.

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Here are three scenarios to help
demonstrate how it could work.

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For this example, let's
assume the goal is $250,000

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in yearly income in retirement.

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In scenario one, after
maximizing contributions

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to your 401k and
taking advantage

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of your employer's match-you
could potentially take all your

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retirement income from
tax-deferred assets.

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But assuming you will be

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in the 24% marginal tax
bracket-you will need

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to withdrawal significantly
more to net $250,000 in income.

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In scenario two, you could take
less from tax-deferred assets

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to lower your marginal
tax rate to 22%.

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And then draw from taxable
accounts (assuming a 15% capital

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gains tax rate) to
make up the rest

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of the needed income-lowering
your overall tax liability.

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In scenario three,
adding withdrawals

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from tax-advantaged accounts
can help further manage your tax

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liability in retirement.

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A Roth IRA can provide
a tax-advantaged source

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of retirement income, but
because of income restrictions,

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you may be limited in
what you can contribute.

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Life insurance is
another option,

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especially if you are not
planning to retire for ten

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or more years and need
death benefit protection.

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Here's how it works: You
fully fund the policy

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with your premiums.

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Over time, your cash value
accumulates tax-deferred.

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Once you reach retirement
you can access the cash value

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through loans and withdrawals
(typically income-tax-free)

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to supplement retirement
income when you need it.

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And, at your death,

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the remaining life insurance
death benefit net of loans

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and withdrawals will be paid,
typically income-tax-free,

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to your beneficiaries.

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Using life insurance

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to supplement your retirement
income you could potentially pay

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less in taxes versus the other
two scenarios-helping you keep

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more of what you save.

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To learn more about how
this strategy might fit

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into your protection and
retirement income plans talk

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to your financial advisor.

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  • Not Insured by the FDIC or Any Federal Government Agency
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