People don’t know what they don’t know. I have met with multiple clients who have had no idea what else is out there, when it comes to accumulation, protection and distribution of your money for retirement. We are often told to participate in the traditional “retirement” accounts, if you can call them that, by co-workers, supervisors, companies, Wall Street, general public, parents and friends. If you took the time to educate yourself on other financial vehicles, you could use for your best interest and financial future, you would come to realize another option not many people know about. This option consists of four major aspects, which will only help you achieve a more prosperous financial future. The four main components are liquidity, predictable rate of return, protection from market volatility and tax advantages.
Liquidity:
Within this financial vehicle, you have tax-free access to your cash value with no age restrictions. Also, if you requested cash from this account, there are no questions asked and a check would be mailed to you within 48-72 hours.
Within traditional retirement accounts, 401(k), 457(b), 403(b), IRA, the federal government has an age restriction of 59 ½. If you withdraw your money from a traditional retirement account prior to 59 1/2, you will incur a 10% penalty and federal / state taxes. Not to throw fuel on the flames but traditional retirement accounts also require you to take minimum distributions at the age of 72.
Would you agree, having complete access to your money at any age is more beneficial?
Predictable Rate of Return:
Over the past 30 years, this financial vehicle has averaged an annual rate of returns between 6%-12%. Within this financial vehicle, an indexing strategy is used which allows your money to grow without being invested directly into stocks, bonds or mutual funds. Within this strategy, your money is mirroring an index fund and your account is credited as the index increases but your gains are locked in if the index losses value.
Within traditional retirements accounts, you hard earned money is directly invested into stocks, bonds and mutual funds which can be unpredictable and unreliable due to market volitility.
Protection from Market Volatility:
As mentioned above, this financial vehicle uses an indexing strategy, where your money is not directly invested in the stock market. Because your money is not directly invested into the market, the indexing strategy allows you to have a 0% floor. The 0% floor means, when the index, your account is mirroring, loses value, your account does not lose value because your money is not directly invested into the index. This strategy allows you to never interrupt compounding interest!
How much further can your money accumulate if you never had to lose to market volatility? Do you remember 2000-2002 or 2008 or March of 2020?
Tax-Advantages:
Within this financial vehicle, your money grows tax free, you can access your money tax-free and upon death an income tax-free lump sum amount of money is distributed to your family. Talk about leaving a legacy! If you still don’t believe me go check out IRC tax codes 7702(a), 72(e) and 101(a).
So what is this financial vehicle? It is a properly structured Indexed Universal Life. Where else can you have these four greatly impactful aspects to your financial future. Plus, an IUL can be used as supplemental tax-free income in retirement!
Wouldn’t you agree, having more financial education could benefit you and your family?
