Nobody wants to deal with the tax man, but that is usually an unavoidable part of life. However, with the right planning and qualifications, you could opt for an Untaxed Retirement Income Plan (U-RIP). With this kind of strategy, retirement funds can continue to grow while your money remains easily accessible and no taxes are owed on “income” taken from the account.
Tax-free retirement is a retirement strategy that uses indexed universal life (IUL) insurance. IULs can provide tax-free income during your golden years. This method also allows you to leave money to your beneficiaries if you don’t use the entire amount during your retirement.
IULs have a few benefits that other retirement plans like IRAs and 401(k) plans do not. One of the main benefits is that the plan has no market risk, so you can’t lose any money. You’ll benefit when the market is up but won’t lose when it drops.
Indexed universal life policies can also have a higher return than other retirement plans. You can take money from the plan before you retire, without the heavy penalties that come with other retirement plans.
When it comes to retirement savings vehicles, two of the most commonly recognized and utilized are 401(k)s and IRAs. These methods are well-understood by most and can function well when properly managed, but there are also some drawbacks.
Growth earned via 401(k) is taxable and will become an expense as soon as the funds are accessed. A 401(k) also places all risk with the holder since gains and losses are entirely dependent on market fluctuations. Finally, all money in a 401(k) – both monies paid in and earnings gained from investment – will incur a penalty of up to 10% on top of standard taxes if funds are withdrawn before age 59 ½.
People funding IRAs won’t have to worry about taxes down the road as those are paid up front but face other concerns such as an annual limit on how much can be invested, along with the same risk levels and early withdrawal penalties associated with a 401(k).
There are several alternative strategies for retirement saving that are much less common, mostly due to the fact that they simply aren’t talked about as often as a 401(k) or IRA. Better yet, these strategies are designed to drastically reduce the amount of taxes you’ll pay in conjunction with retirement-related income.
Different tax-free retirement strategies require varying amounts of previously built-up retirement plan savings, earned income, and/or qualifying capital gains, so some research is required to find the route best suited for your specific needs. But after finding a route that fits your needs:
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