How to Use Life Insurance For Retirement Savings

One of the things I love about my job is when a retirement plan comes to fruition. And what I mean by that is when I sat with clients, I worked with clients, and the day that they retire, their paycheck was as much or more than what their last paycheck was during their working years. I'm talking about going into retirement knowing that you have a predictable and large stream of income that you're never going to outlive. Today, what we're going to discuss is how you can use life insurance as a retirement savings vehicle, and some of the key things to focus in on on how we create that strategy and why it's going to add value. In today's video, we're going to focus in on how you can use life insurance as a retirement savings strategy. We're going to focus in on financial organization. We're going to focus in on budgeting. We're going to focus in on how to fund the insurance. And then we're going to focus in on the impact that it can make to either create a predictable lifetime income stream or buffer against the volatility of the market. What you don't do is you don't snap your fingers and all of a sudden just have a retirement savings strategy with a life insurance policy. It takes a process. The first step in the process, how financially organized are you? Scale of one to 10, ask yourself that question. Most people are nowhere near as financially organized as they would like to be. That creates massive lost opportunity cost. The average American household wastes tons of money during the life cycle of that household because their financial instruments are not creating homeostasis. They're creating chaos, pinballs. They're bouncing against one another. You might think that decisions on financial instruments are done in silos, in pockets. I go one person for one thing. I go to one person for something else. If they're not coordinated and I don't understand how and why one instrument is benefiting and working with another instrument, I'm going to lose opportunity cost. I might be spending more money than I needed to be. And as a result, my retirement income stream or even just my income stream in general and my cashflow is compromised. First step, organize to one landing page all the instruments in my financial household. When you got financially organized and you have everything on one landing page, it makes it so much easier to do an x-ray. When you go to a doctor's office and they do an x-ray, they're doing an x-ray to understand what's happening inside, what's working and what are the challenges, right? What's healthy and what's not healthy until that x-ray is done, you're not going to have open heart surgery, right? Again, they have to do the analysis. So step two in the process is the analysis of what's working well inside of your financial household and what could be tuned up. Are my deductibles out of whack? Am I creating future liability for myself with income taxation in the future? Am I sending money to financial institutions that I don't need to be sending? Can I capture that money back? Can I beef up my cashflow? When I do that and I beef up my cashflow, I can deploy more to a strategy such as using an insurance policy as a retirement savings vehicle. So now I'm organized. Now I'm budgeted and I'm ready to deploy. Well, I first have to get medically approved for life insurance. That's the very, very first thing. And once that has been completed, then I can create a funding strategy towards my insurance policy. And I can design it so that I have guaranteed growth. I can also design it so that I'm taking on a little bit of risk. I'm putting some skin in the game for greater growth. Whether that's what you want or you want something that has guarantees, we can construct either one. The benefit is that that dollar, that money that's in the policy is gonna accumulate on a tax-free basis and can be distributed on a tax-free basis in the future, which is so critical from a planning standpoint. In other words, it earns tax-free. It distributes tax-free. What a deal, right? And so now that we're budgeted, now that we're financially organized, and now that we're contributing to the insurance strategy that we selected for that future growth, let's talk about what it looks like from a retirement savings and then distribution standpoint. I'm not under the assumption that insurance policy is the only place that you're gonna be putting money. You're gonna accumulate wealth in other areas. It might be the market, it might be alternative investments, but your money should be and will be deployed to numerous different growth vehicles. The insurance is gonna give you the permission slip to spend that money in the future. And the reason for that is because there is something called a death benefit attached to the insurance policy. What many of my clients will do is they will take a sum of money that is equal to the death benefit of their insurance policy and they will spend it at its maximum rate. I'll repeat that. They will take the death benefit, excuse me, they will take the sum of money that is equal to the death benefit of the insurance policy and they will spend that money at the maximum rate. Why? Because if you pass away, the death benefit of the insurance policy replenishes the bucket. So it's a legacy maneuver as much as it is a permission slip for you to be able to spend your other money at its maximum rate. Essentially what I'm talking about is what used to happen for people before retirement planning was a thing. They worked for companies and when they retired, they got a pension. What I'm simply talking about is creating a pension style income for yourself during retirement. It's really not all that complex to do. Just takes the work that I had talked about before. I have other clients that don't want to look at pension style income. They wanna spend the way that they wanna spend but more importantly, they wanna have the control of their money. They wanna distribute from different sources. I'm gonna paint a picture for you. If I have a million dollars and forget about inflation, forget about taxes, forget about all those things for a second, just basic math. If I have a million dollars and I start spending from that million dollars, let's say I take $100,000. Well, that's a 10% distribution from that one million dollars. What happens if that one million dollars while I'm taking that distribution loses value? Well now, shoot, I'm chewing down principal, right? At a rate that is faster than my money can recover because guess what? I'm not contributing to it anymore. I'm retired, I'm taking money. So when that happens, usually the following year or years after that, you get recovery. When you get recovery, if you're not contributing, you wanna let it recover. You don't wanna spend again. The insurance operates as the permission slip to allow you to recover. Why? It's got cash. And guess what? That cash in most cases did not drop when the market dropped. I'll say that again. In certain insurance strategies, when the market dropped, I accumulated. What does that mean? What that means is that I can take a distribution, whether it's a withdrawal or just take a loan against my policy the following year and let my portfolio recover. It's a seesaw bouncing back and forth. What we do is we call that buffering against volatility. It increases your spending power. It increases your predictability of distributions in general. And oh, by the way, also we'll keep a legacy intact. Hey, what's up folks? This is Rob Gill with The Money Minute. And a lot of times I'll get asked the question, what do I need to know about retirement planning? Well, the first thing you need to know is whatever product you're gonna put your money into on a monthly basis for your working years during the wealth accumulation phase, you need to understand how those products are gonna either be taxed today or later on. And then taking a step further, speak to your accountant and or your fiduciary and look at the history of what taxes are so you could be able to figure out possibly in the future what tax bracket you're gonna be as you're taking this money out. So in this video, you've learned three things. You've learned that it's incredibly important to not only be budgeted, but also be financially organized. You've also learned how we deploy monies to insurance strategies and the different types of insurance strategies that you can use. But the third thing that you learned is that you can use your insurance as a permission slip to spend your assets or jockey back and forth from where you're spending to maximize your outcome. Here's the exciting news. We've already created a roadmap for this. Click the link below. Somebody from my team will reach out to you and have a conversation about how we can create the same style of retirement strategy for you and your family. Do yourself a favor.