Personal / College & Retirement Planning

College Planning

Where you accumulate your child’s college savings could impact his or her ability to attend college almost as much as grades and standardized test scores.  When it comes to education planning, many options are available.  One of the most misunderstood options is that of life insurance.

Traditional methods for funding an education include 529 plans and Educational IRA’s.  While these are great accumulation vehicles with tax benefits, you are bound to use the funds for education only otherwise taxes become an issue.  With life insurance, it doesn’t matter how you use the cash.  Students can use life insurance savings for college, a down payment on a house, to start a business or for retirement, no restrictions.

Another big issue to consider with respect to college planning is the subject of financial aid.  Saving for a child’s education is a big commitment!  Most will choose a 529, mutual funds or stocks to plan accordingly.  The one downfall to doing this is that the student’s assets along with the parent’s assets are counted against him/her in the ability to get aid.  Cash value life insurance is a strategy around this and is not counted against a student.  This is a big deal!  Asset-based long-term care is another option here since it is classified as “life insurance.”

Perhaps it’s time to consider life insurance in some form to incorporate into your education planning efforts?  Contact us today to see if this strategy makes sense for your situation.

Retirement Planning

Flexibility is what you’ll need in your retirement planning because unexpected things will likely happen. A cash value life insurance policy could provide just the flexibility you need and be an important part of your retirement planning.

The last thing we want to happen during your retirement is to run out of money! To help prevent this our retirement planning needs to accept that:

  1. we could be retired for a long time and
  2. our savings may need to last for two lives (our own and our spouse’s).

Retirement planning needs to have a margin of safety because it’s impossible to know what our world will look like 10, 20 or 30 years after we’ve retired. We can help protect our retirement by building a backup plan, or a Plan B, to protect ourselves and our spouses/partners from developments we never expected.  Cash value life insurance can pay out an income tax-free death benefit to your beneficiary to help strengthen their finances. And while you’re alive, if you need to, you may be able to withdraw or borrow cash values as tax-free income to help meet financial emergencies or supplement your retirement income. (Consult your tax professional).

Cash value life insurance can be an important component of our Plan B.

Cash value life insurance can help us deal with risks like these:

Reduced purchasing power – Inflation and subpar investment performance can reduce the standard of living in our retirement savings.

Health crises – Health emergencies can force us to spend many thousands of dollars of our retirement savings.

Living too long – We can’t plan our life spans. The longer we live, the longer our savings need to last.

Natural disasters – No matter where we live, we can be affected by floods, tornados, fires, etc. Damages from natural disasters may force us to spend our retirement savings sooner than we planned.

Tax increases – Federal and state tax rates are at or near historic lows. Governments will likely need more money to provide for public services.

Creditors’ claims – Some states allow life insurance policy owners creditor protection. Because life insurance death benefits are often used to maintain the financial security of spouses and children, many states give life insurance cash values and death benefits significant protection from the claims of creditors. The amount of protection varies from state to state, but the bottom line is that life insurance cash values and death benefits may be reserved for family members even when creditors are owed substantial sums of money.

Contact us today to see if life insurance is a fit for your retirement plan.