Tax Free Retirement Strategy

What If…

You could provide an income tax-free death benefit for the people who depend on you?

You could defer taxes as your accumulated cash value grows?

You could potentially access that cash value using income tax-free policy loans and withdrawals, to use for retirement income or other needs?

After-Tax Strategy….When you set aside a portion of your after tax income into an account for retirement, you are paying taxes annually on any earnings. An example of this type of savings is a Certificate of Deposit.

Tax-Deferred Strategy…If you put some of your after-tax income into a retirement account, the money in that account can grow without being taxed. But when you retire and start taking money out of the account, you'll have to pay taxes on the money that grew while it was in the account. A Non-Deductible IRA or an annuity is an example of this type of savings.

Pre-Tax Strategy…Your retirement savings plan might include an employer-sponsored qualified retirement plan, such as a 401(k) or 403(b) plan. With these types of plans, you do not have to pay taxes on the contributions made to the plan, and the earnings grow tax-deferred. When you take retirement income from these types of plans, the benefits are income taxable.

Tax-Free Strategy…The Tax-free Strategy is similar to saving a portion of your after-tax income and allowing the earnings to grow tax-deferred. Retirement income is received tax-free. A Roth IRA is an example of this type of savings. Another type of financial vehicle is permanent life insurance.

Taxed now, or when you need it?

If you save on a before tax basis, such as a Traditional IRA, your contributions are usually tax deductible. However, all income received from this account will be taxed as ordinary income. If you make a withdrawal prior to age 591/2, you may incur an additional 10% penalty. This leaves you exposed to potentially higher future tax rates. If you believe taxes are going up this could be devastating to your retirement income. In this example, you are taxed on the harvest.

The contributions to a Roth IRA are taxed before they are deposited, but both the contributions and the earnings may be tax-exempt. This can help protect you from future tax rate increases.

What do you think future taxes will look like?

What you think about the future economy can have an impact on how you save today…

i) A qualified plan or Traditional IRA makes a lot of sense. If you think future tax rates will be lower, then saving today on a pre-tax basis is beneficial to your strategy.

ii) You may want to consider a tax-free retirement strategy such as a Roth IRA or permanent life insurance. Especially If you think future tax rates will be higher.

A Closer look at tax-free strategies…

ROTH IRA's are a Good choice…if you qualify. In order to contribute to a Roth IRA

your adjusted gross income must be below a certain threshold. Also, even if

your income is below the threshold the total amount you can contribute is

limited and could phase out should your income increase.

What if you want to save more or can't qualify for a ROTH IRA?

Permanent Life Insurance may be an option for you, Permanent life insurance provides death benefit protection and also allows you to build up tax-deferred cash value that can be accessed during your lifetime to generate a stream of tax-free retirement income.

Permanent Life Insurance Provides:

• Tax-deferred build-up of cash value

• Potential for tax-free retirement income

Income tax-free death benefit

How Permanent Life Insurance Works

Added Benefits of Permanent LIfe Insurance-The Tax-Free Retirement strategy

-Self Fulfilling

In case of untimely death, the tax-free death benefit can help fund your spouse's retirement goals.

-Emergency Funds Available

Accelerated Benefit Riders are an option you can elect into when purchasing an insurance plan or annuity. They allow you to access all or part of your death benefit to help pay for costs associated with a terminal, chronic or critical illness.

-Disability Protection

A Waiver of Premium Rider is a benefit provided by some insurers to policyholders upon proof of disability. Whereas the Benefit Rider allows the policyholder to receive payments from the insurer during the life of the policy, the Waiver of Premium Rider allows the policyholder to receive payments from the insurer for a certain period of time, regardless of any work status.

What's the best strategy for you?

Although a Roth IRA can be a great tool for many people, there are some restrictions on how much you can contribute and how much income you are allowed to have in order to qualify for one.

Permanent Life Insurance might Be The Answer!

Life insurance has many uses. It can be a death benefit for someone who is financially dependent on you. In addition, if you have cash value, you can lose money in investment accounts, but the money can be withdrawn tax-free by the owner of the policy. Premiums are determined based on the amount of coverage you need and distributions, through tax-free withdrawals and loans, can generally be taken after your first policy anniversary.

A combined strategy may be best suited for you…

If you are eligible to contribute to a Roth IRA but want to set aside more money than the contribution limits allow, you may want to consider both a Roth IRA and permanent insurance. You can contribute the maximum amount allowed to your Roth IRA, and then apply the excess amount to your permanent insurance policy.

Your insurance agent can help you determine the best coverage to meet your goals. Click Here to Meet with a DrivenFin Life Insurance Agent.