Tax Free* Retirement Options

What are your tax free* retirement options? Does such a thing exist? Thankfully, with the right type of planning, tax-free* income is possible, For instance, an indexed universal life insurance (IUL) policy may be a good tax-free* income option for those in retirement. An IUL allows access to your cash value without taxation. In addition, there are other possible benefits to an IUL as well. These include death benefits, potential tax-free* beneficiary income, and more.

What Are Your Beliefs About
Tax Free Retirement Options?

Of course, no one knows the future for sure. However, you probably have some thoughts about how taxes might look in the future. Do you believe that taxes could be higher? If so, you may want to create a plan now to address that possibility. Obviously, taxes do impact your retirement income. Changes in tax laws can also affect your overall retirement plan. If you have money in lower interest-bearing accounts, taxes can take away precious dollars. No matter your beliefs about taxes, we want you to have a plan for each scenario. Know your options for reaching your goals.

In addition, consider which of your assets may be taxable versus non-taxable. An IUL with cash value, for example, allows you access to your money without paying income tax on the money. But, certain retirement accounts demand you pay taxes on any money you access. Also, some of that money in retirement accounts might be at risk in the stock market. Money in an IUL, on the other hand, has protection from stock market loss. It is tied with an index, instead of directly invested into the markets. Details of each IUL policy differ, but the tax-free* income benefits are basically universal in these plans.

Retiring Tax-Free?

Could an IUL be an option for you? Below are some questions to consider to help you determine if it might be. If these questions bring up ideas about your own retirement plan, feel free to reach out to us. Our team at Cornerstone Wealth & Tax Advisory is here to help you find out more about tax-free* options in retirement. In addition, we can discuss your current financial situation and determine if an IUL may be right for you.

  • Could taxes be higher in the future?
  • If taxes are higher, should I start preparing now?
  • How would I offset higher taxes in retirement if that should occur?
  • How much in taxes might my beneficiaries pay? Should I look at ways to reduce this?
  • Do I have any tax-free* money set aside?
  • Would I rather pay taxes now or later at potentially higher rates?

If you get more information about tax-free* retirement strategies, it could impact your retirement. Of course, we can’t know for sure what tax law will do in the future. We can’t know how it will affect your money with certainty. But, we can make a plan for the possibilities. Using an IUL, you may be able to give yourself a tax-free* income option in retirement. Additionally, you may see a potential upside indexed interest that could provide a reasonable rate of return.** Some retirees may find that an IUL can be a valuable part of their retirement strategy.

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*Proceeds from an insurance policy are generally income-tax-free, and if properly structured, may also be free from estate tax. Income-tax-free distributions are achieved by withdrawing to the cost basis (premiums paid), then using policy loans. Loans and withdrawals may generate an income tax liability, reduce available cash value, and reduce the death benefit, or cause the policy to lapse. This assumes the policy qualifies as life insurance and is not a modified endowment contract. The Host and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. This content is not intended to serve as the basis for any investment or purchasing decisions, nor does it recommend or involve the purchase, holding, or sale of a security.  All figures herein are hypothetical and for illustrative purposes only to explain general concepts.  No figure is to be relied upon as being accurate nor a guarantee or projection and is meant only as a partial overview of some relevant features and benefits of general insurance products that may be in the marketplace, and whose availability will be dependent on the State of residence of the consumer, and their individual suitability for the product they are wanting to purchase. Where insurance products are mentioned, any and all guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.

**Reasonable rate of return over time. 

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