How to UPGRADE Your Retirement Strategy

retired man working on boar

Let’s face it, when it comes to retirement it’s all about generating income right?

You’ve worked 40 years to build up and protect this nest egg and were always told NOT to use it until retirement.  So, you’ve done a great job following all of the rules like, ‘Don’t raid your retirement nest egg” or “Your retirement savings account shouldn’t be used to pay for your current bills” and “Build up an emergency fund so you DON’T have to tap in to your retirement savings account”.  Ok, you accomplished all of that, but now you need those funds to pay for “living in retirement”, but that’s hard to do and go against following the golden rules for 40 years.

My point is you deserve to enjoy the next 25 to 35 years of retirement.

Do all the things you’ve dreamed of doing.  Travel to foreign countries, buy a RV and drive the country, purchase a vacation home,  pursue your hobbies, join that country club and spoil the grandkids.  However, when I have meetings with clients, some of them haven’t fulfilled any of their dreams and desires.  Why? “Oh just in case something happens” or “We don’t want to run out of money” or “We want to make sure there’s enough for the kids and grandkids”.

Do you know the end of this story already?  They never truly enjoy their retirement and pass away with plenty of money.

And who gets to enjoy it?  The kids.  They buy a vacation home, travel the world, and join the country club.

In short, it can be a challenge to secure a dependable and consistent retirement.

What if you could double the amount of guaranteed lifetime income like the amount you will eventually receive from Social Security?

Have you considered “self-funded” retirement options? Even if you have built a diversified retirement plan that includes savings and investments, that money can be affected by market fluctuations.

So, here are 2 ways to UPGRADE your retirement strategy so you can enjoy the life you deserve.

  1. Consider Using Cash Value Life Insurance

Supplementing your 401(k) and Social Security with cash value life insurance can help you achieve more financial flexibility, protect your loved ones, give you access to the cash value while you alive, have a long term care back up option, and offer tax advantages that can benefit YOU NOW and your family.

Let’s quickly discuss using the cash value portion pf your whole life insurance policy real quickly.  Tax-free supplemental income potential is a strategy most people ignore, but here’s how it works.

Cash value life insurance offers the ability to access the available cash value through potentially tax-free(1) loans or withdrawals. Such loans or withdrawals may help you and your family cover unexpected expenses before or during your retirement.

It’s very important to understand a Tax Efficient Distribution Strategy So You Can Pay Less in Taxes

Paying attention to your taxes in retirement is often over looked and ignored until it’s too late. Here’s another article on 5 Advantages to a Tax Diversification Strategy Why it Matters. 

     2. Consider Purchasing a Fixed Indexed Annuity

As I mentioned earlier, even if you have built a diversified retirement plan that includes savings and investments, that money can be affected by market fluctuations, higher inflation, and unexpected expenses like healthcare.

Determining your retirement spending needs aka basic living expenses is challenging, but so is retirement income so you can enjoy the life you deserve. Having realistic expectations about your retirement costs, spending habits, and income can help you navigate your financial life in retirement. Some points to include are:

  • What are your estimated costs for your planned retirement activities such as travel, unexpected expenses, and medical costs?

  • What is the status of your investment portfolio and retirement accounts? When you retire, you will be making a switch from saving to spending. Will assets have some growth potential due to inflation? You may also consider minimizing investment risk to better protect your portfolio.

  • What is your expected income during retirement? This may include Social Security, pensions, annuities, money from a part-time job, or income from a rental property you may own.

  • How long will your savings last? You may outlive your savings, so factor in that possibility to help prevent the well from running dry.

One type of financial product that can help you secure retirement income is a fixed index annuity (FIA). An FIA is an insurance contract that provides you with income payments in retirement. It is designed for long-term goals like retirement because your interest payments are based on the performance of a stock market index. However, unlike owning stocks, FIAs offer protection against market loss and downturns and are not a direct investment in the stock market. (2) Along with premium protection, FIAs also offer the opportunity for growth that may help guarantee you have a stream of income payments for as long as you live.

Talking with a financial professional from our firm about finances is something many people only consider when they are having financial difficulties. However, it’s a good idea to make sure you are on track.  We can help you be more financially prepared, and ensure you have a retirement “paycheck.” We can offer you options for achieving guaranteed lifetime income. To learn more about how you can ensure you have a retirement “paycheck,” or to find out more about a fixed index annuity or cash value life insurance contact us at info@commonfinancialsense.com

Until Next Time…

Related Articles:

How to calculate the money you will need in retirement

How to prepare for the retirement you want

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(1) For federal income tax purposes, tax-free income assumes, among other things: (1) withdrawals do not exceed tax basis (generally, premiums paid less prior withdrawals); (2) policy remains in force until death (any outstanding policy debt at time of lapse or surrender that exceeds the tax basis will be subject to tax); (3) withdrawals taken during the first 15 policy years do not cause, occur at the time of, or during the two years prior to, any reduction in benefits; and (4) the policy does not become a modified endowment contract. See IRC §§ 72, 7702(f)(7)(B), 7702A.Any policy withdrawals, loans and loan interest will reduce policy values and may reduce benefits.

(2) Fixed index annuities are not a direct investment in the stock market. They are long-term insurance products with guarantees backed by the issuing company. They provide the potential for interest to be credited based in part on the performance of specific indices, without the risk of loss of premium due to market downturns or fluctuation.

Although fixed index annuities guarantee no loss of premium due to market downturns, deductions from your accumulation value for additional optional benefit riders or strategy fees associated with allocations to enhanced crediting methods could exceed interest credited to the accumulation value, which would result in loss of premium. They may not be appropriate for all clients. Interest credits to a fixed index annuity will not mirror the actual performance of the relevant index.

This information is provided for general reference purposes and should not be viewed as investment advice or as a recommendation for a specific allocation. Neither Midland National, nor any agents acting on its behalf should be viewed as providing legal, tax or investment advice. Always consult with and rely on a qualified advisor.

“Income” or “lifetime income” refers to guaranteed payment of lifetime payment amounts (“LPAs”). It does not refer to interest credited to the contract. You should consult your own tax advisor regarding tax treatment of LPAs, which will vary according to individual circumstances.

The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.