One should always do the math when considering retirement planning. I would encourage a person to shy away from agents or advisors who do not understand our changing demographics, plus they need to understand the IRS's Publication 590. I have shared this with you before. You cannot get a guaranteed stream of income from a non-guaranteed financial vehicle. OK, that is enough on ROTH IRAs. (Illustrations are net of guarantees.) “You will instruct me and teach me the way I should go; You will counsel and watch over me.” — Psalm 32:8
How does the PB compare to using a Qualified Plan? Scenario #2
What is a qualified plan? It is the government’s 40(k), 403b, SEP, IRA, or Simple IRA. Again, we have twin sisters trying to decide what to use as a funding vehicle for their retirement. They are both aged 30 and have decided to save $7,500 per year. They agreed to use a current rate of 4% return for their plans, and both sisters are in a 22% tax bracket, including state taxes. They do not want to withdraw any funds until they have to begin taking their required minimum distributions at age 72. How can anyone predict what taxes will be in the future? Sister #1 placed her money in her company’s 401(k). Sister #2 placed her money in the PB using a well-designed, High- grade, Whole life insurance policy. Dividends are not guaranteed and are subject to change; however, she does not having to worry about all the pitfalls of a qualified plan. PB includes waiver of premium in case of a disability for 25 years.** Year Sister #1 IRA 4% ROR Death Benefit Sister #2 PB Acct. Death Benefit / Waiver of Prem.
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