THE NEW RULES OF RETIREMENT SAVING • 73
Now, maybe you have kids and that death benefit is important. Maybe you plan to have kids in the future. Maybe you have a spouse you want to protect. A death benefit makes your retirement savings plan self-com- pleting. What does self-completing mean? David and Janie, both age forty-one, are my clients. David earns the majority of their income, with Janie holding a part-time job as a preschool aide. Needless to say, most of the money they put away for retirement comes from David’s paycheck. Both David and Janie will need income to live on in retirement. So what happens if, heaven forbid, David were to get hit by a car crossing the street today and not survive? Janie will still need retirement income, but now the paycheck that delivers their savings money — David’s — is gone. The fact of the matter is, 401(k)s are just not self-completing. If you die, your 401(k) is worth whatever is in your 401(k) on that day. Oh, and taxes are still due. So make that 20 to 30 percent less than what was in your 401(k) on that day. Thankfully, Janie and David aren’t saving for retirement in a 401(k). They’re using IUL. So if David gets hit by that car, Janie won’t just have the account value of what they’ve saved. She’ll have a death benefit that will make up for all the future contributions David is no longer able to make. Her lifetime savings won’t suffer. Her retirement won’t be at risk. As you can see, IUL overcomes many of the structural risks you face when saving in other popular vehicles. But what about the other risks? Flexibility isn’t enough. You need your money to grow, too.
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