Secure Retirement Strategies is dedicated to offering retirement income planning strategies to Lehigh County, PA, and the surrounding areas. We know that most people’s primary method of saving for retirement is either through 401(k) accounts or Roth IRAs. While these are all smart investments to be made, the most secure method of retirement savings is through a tax-free life insurance retirement plan, commonly referred to as LIRP. If you’re sitting there wondering what that is, we are here to tell you why this will be the best thing you could do for your retirement.
LIRPs are the best option for clients who have more income to contribute than is allowed with a Roth IRA. While Roth IRAs have contribution limits, LIRPs will enable you to add as much as you want. They may even allow you to collect tax-free income depending on the size of your death benefit.
Theses benefits are underwritten with no premium loads on commission-free products, allowing for more work on assets within your policy. In order to gain tax-free income, you want to buy as little a death benefit as possible while still clearing the non-MEC threshold. This way, your cost of insurance stays low. Non-commissioned life insurance policies are your best bet for this because of their cash accumulation potential.
With a permanent life insurance policy, withdrawals and loans can be taken out as tax-free distributions, and tax-deferred revenue accumulates over time. Your tax-free income will not count as provisional income and will reduce the likelihood of your Social Security becoming taxable. These tax-free income plans will minimize your taxes from other retirement income sources, such as your 401(k)s and your Roth IRAs.
Your after-tax returns can be lowered when retirement income is funded solely through taxable sources. Long- and short-term capital gains, tax-deferred accounts, and Social Security are all examples of these sources. It is also important to be wary of income from municipal bonds. They may be advertised as tax-free, but this is not always the case. If you are not a resident of that municipality, or if it is a mutual fund with taxable holdings, you can still be subject to taxation.
Here’s a video from our Managing Partner Marc Smith explaining why the LIRP and its tax-free benefits are so beneficial to you.
The experts at SRS highly recommend using LIRPs when looking ahead to retirement. If you have a surplus in tax-deferred assets and are looking for an alternative to annuities, this is going to be the best tax-free investment you ever made. If you are interested in looking into LIRPs or any other financial planning services for retirement in Lehigh County, PA and beyond, contact Secure Retirement Strategies today.