A recent Gallup Poll reported that 21% of individuals who own 401(k)s have dipped into their retirement accounts during difficult financial times within that last five years (gallup.com). The survey states that unless an individual is planning on only using their qualified plan for retirement and nothing else, it is unwise to prematurely make withdrawals from the account for other investments.
It’s likely that some people who contribute to a 401(k) are aware of the penalties and tax fees that come when distributions are taken out early, however for most people, utilizing their 401(k) is their only saving grace if they are in financial trouble.
Instead of putting all of your money into a qualified plan, that you are tempted to use as a safety net during personal financial uncertainty, put your money into a Permanent Life Insurance Policy that can give you safety and liquidity.
In short, Life Insurance can meet your retirement needs because it is a savings vehicle that can not only help you prepare for retirement, but at the same time, allows you unpenalized access to cash.
Life Insurance as Income
Because properly structured Whole Life Policy insurance offers a cash value, any policyowner can use the cash value for a supplemental retirement income, or to invest in other performing assets that provide cash flow.
401(k)s gained their popularity in the eighties, and a lot of individuals have used the qualified plan as their only retirement vehicle. If you are already saving into a 401(k), it is wise to supplement the account with another form of retirement security. For instance, we saw what happened to the qualified plan during The Great Recession – many people lost almost half of what they contributed.
Using a Whole Life Policy for retirement is a strategy, not a product. Effectively following this system will create additional steams of income to supplement a wise and safe retirement. The money you contribute to your policy via premiums build cash value tax-free. There are several ways to general income from your life insurance policy in retirement.
When you borrow against your policy’s cash value you have complete access to money, however, the funds inside of your policy still earn a rate of return. As you continue this borrowing strategy leveraging your life insurance policy, compounding interest continues to grow. Your borrowing power becomes exponential.
This borrowing strategy is known as the Infinite Banking Concept or privatized banking. Instead of allowing banks to capitalize on your dollar, you receive the capitalization benefits. Whether you are using this concept early in life to prepare for retirement or late in life as a retirement vehicle, Whole Life Insurance is an excellent product.
For further information on how Whole Life Insurance can help you retire the way you imagined,
Watch: Know Your Retirement
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