A Lesson on LIRPs: They’re not just for higher-income investors


If you’ve been researching your options for retirement savings and thought your level of income confined you to the same old traditional avenues — namely, the 401(k), Roth IRA or a standard investment portfolio — might we suggest you expand your horizons to include a LIRP?

LIRP stands for Life Insurance Retirement Plan. Because LIRPs don’t come with an income contribution limit, these accounts historically have attracted the highest-income investors, folks looking to live out their Golden Years while watching their savings grow and enjoying large, tax-free withdrawals. 

However, any smart, patient investor who’s concerned about security in retirement and doesn’t want to “play the market” with a retirement fund can benefit from a LIRP. Anyone in search of a solid long-term financial plan that’s free from the limitations of traditional investments should consider a LIRP. 

Let’s get to know a little more about LIRPs. Here are some of the more pertinent details:

  • LIRPs utilize life insurance policies that de-emphasize death benefits while focusing on the growth of cash value.
  • LIRPs don’t place a limit on how much an investor earns, or on how much they can contribute to the fund on an annual basis. 
  • LIRPs allow withdrawals at any age, without penalty.
  • LIRP withdrawals aren’t counted as taxable income. You can take out premiums you’ve paid or take money you’ve accrued as an investment gain, as a loan, tax-free.
  • LIRPs give investors the power of choice; they can choose to place their money in mutual funds or opt to accept a fixed, guaranteed rate of return from the insurance company.

What’s not to love about a LIRP? Well, plenty, if your policy isn’t well-structured or properly maintained. That’s why an experienced and skilled financial planner is a must in the LIRP equation. 

At Secure Retirement Strategies, we know that with our help, a LIRP has the power to greatly benefit investors of all income levels, giving them great freedom and flexibility, as well as significant savings at tax time. 

To make a LIRP work for you, we recommend contributing as much as possible at the outset and later using the cash value of the policy to pay insurance premiums. Minimizing the policy’s death benefit is a key to maximizing that cash value for your years of retirement. Our experts will devise a strategy that works best for you, custom tailoring your LIRP to meet your long-term goals!

For more information about LIRPs, or to address any questions you might have about tax free investments in Bucks County, PA, and the surrounding region, please don’t hesitate to contact your trusted team of retirement advisors at SRS today!