How’s your retirement plan working out for you? Have you ever even taken a look at it lately? Are you going to make your goals happen or are you going to fall short and have to work an additional five years.

If you’re not sure how to answer this question or you don’t think you’re going to make it, it may be time to look at IUL Insurance because it just might save your retirement plan.


Why so many people come up short at Retirement


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Since retirement planning (wealth accumulation) is not an exact science, any plan needs to be reviewed regularly because of inherent variables. More simply stated; things can change.

There’s a good reason to read your statements you regularly get regarding your 401(k), IRA, Roth IRA, and any other investment product you’re using to get from point A to point B.

It’s even more interesting that although most people look forward to retiring, less than half actually take the necessary steps to make certain they’ll have more than a monthly social security check.

The simple truth is that unless you are a high-income earner or have accumulated wealth through inheritance, a lawsuit, or the lottery, you must start contributing your hard-earned money to a retirement vehicle that will pay interest on that money. Here’s why many do not:

  • Many individuals and families can barely pay monthly expenses and have little if anything left over to invest in a retirement plan.
  • Many believe they will simply downscale their lifestyle and live off social security retirement.
  • Many people work at a job that doesn’t offer retirement plans like a 401(k).
  • A lot of folks who do invest in a company-sponsored plan like a 401(k) do not invest the maximum allowed.
  • Many who have either personal or employer-sponsored retirement plans fail to consider how income tax will diminish the value of their retirement savings when they begin to withdraw an income stream.
  • Even high-income earners have discovered that the constraints that the government places on traditional retirement plans can prevent them from accumulating enough wealth to live a retirement lifestyle they’ve been working toward for decades.

Certainly, we could list even more reasons why retirement plans fall short but there are two primary reasons we can address and remedy right now. Taxes and rules.


How Taxes and Rules will negatively affect your Retirement Plan


Even if you do not belong in any of the groups we’ve listed above, taxes and rules can kill your retirement unless you make some changes early on.


IRS Building

Many financial planners are telling their prospective clients that an IRA or 401(k) will pay huge dividends at retirement because the investor will be in a much lower tax bracket when they reach retirement age.

That might be realistic if we were in 2004 but we’re not. Right now, income taxes are lower than they’ve been for quite some time but that is likely to change because our government does a terrible job when it comes to budgeting and spending.

Right now, over 92% of our country’s revenue is eaten up by the interest on our debt ($22 trillion), the cost of Social Security, the cost of Medicare, and the cost of Medicaid. Everything else must be paid with the remaining 8% or the debt just continues to increase.

The day is coming when our legislators will put their foot down and when they do, the taxpayers will have to pay. Knowing this, do you really believe your taxes will be lower for you 20 years from now?


Traditional investment products allow hard-working individuals and families to accumulate the wealth they’ll need after they retire but tax-hungry legislators always have their hands in the process. The constraints you’ll be subject to are:

  • Maximum contribution limits
  • Maximum income limits
  • Early withdrawal fees and/or taxes
  • Required minimum distributions
  • Taxes on withdrawals during after age 59 ½ (IRA and 401k)
  • Taxes on withdrawn earnings

Whether the investment product(s) you choose is taxable or tax-deferred, you must consider how taxes will impact your retirement income when you are developing your retirement plan rather than coming up short of your goals because you failed to consider taxes and rules.


Using Indexed Universal Life Insurance for Retirement Planning


Yes, I know, indexed universal life (IUL) is insurance and not an investment product. Nothing could be further from the truth, and here’s why.

Yes, there is a death benefit in IUL but you would need that anyway. By having a death benefit (making it life insurance) the tax-hungry legislators that we know and love pretty much leave it alone.

The cash value in your IUL represents the portion of your premium that is not used to cover the cost of the life insurance and any fees. The investment aspect comes into play because your cash account is linked to the performance of one or more indices in the stock market.

This means if the S&P 500 or the NASDAQ goes up a certain percentage amount during the year, your cash account will be credited that percentage up to the CAP rate in your policy.

On the other hand, if the market tanks like it did in 2008, you won’t have to sell the boat because your account has a FLOOR rate that prevents you from losing money.



What about the tax liability?


This is the best part. When the time comes for you to start taking money out of your IUL, you do so via policy loans rather than withdrawals because the policy loans are not considered income and therefore you get that money each year tax-free.

Additionally, you do not have to repay the loans you’ve taken from the policy. Instead, the insurance company will simply deduct the outstanding loans and any unpaid interest from the death benefit when you die.

The remaining death benefit is then paid to your beneficiary tax-free.


This sounds great. What should I do next?


If you think you would benefit from having an IUL (75% of Fortune 500 CEOs have one), you should learn more. Like any insurance or investment product, Indexed Universal Life insurance has a lot of moving parts that you need to be aware of.

We strongly urge you to contact one of our insurance professionals or speak with a retirement planning professional and get all of the product information you need to make an informed decision.

We certainly don’t recommend that you consider an IUL as your only investment product but rather one of several products you should use accumulate the wealth you need to live the retirement lifestyle you are planning for.

Here is a list of recommended articles for your review:



Frequently asked Questions

Is my 401(k) the best way to save for retirement?

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Traditional retirement plans work well if you expect to be in a lower tax bracket at retirement. There are, however, many constraints placed by the Fed that will impact your ability to accumulate sufficient wealth for retirement.
Maximum contribution limits
Maximum income limits
Early withdrawal fees and/or taxes
Required minimum distributions
Taxes on withdrawals during after age 59 ½ (IRA and 401k)
Taxes on withdrawn earnings

Are withdrawals from an IUL taxable?

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When the time comes for you to start taking money out of your IUL, you do so via policy loans rather than withdrawals because the policy loans are not considered income and therefore you get that money each year tax-free.

Can my IUL withdrawals impact my social security at retirement?

IUL insurance

The IRS does not considered policy loans the same as income so there is no impact on your social security retirement benefits when you retire.

Let's Talk about Your Wealth Strategies
For more information about Indexed Universal Life Insurance and to see if its the best solution for you, call us at (800) 595-1130 during normal business hours or contact us anytime through our website.