Spend Your Retirement Savings & Still Leave a Legacy, Tax-Free

The Case for Spending More During Retirement

According to financial research firm, Hearts & Wallets, 28% of people age 65 and older with at least $100,000 in savings withdrew less than 1% from their accounts. Money Magazine debunks the inclination to be “unnecessarily frugal” in an article titled, “Why You Should Spend More Money in Retirement.” The piece offers a couple of solid strategies to “relax and enjoy” retirement, but leaves out a no-brainer option.

Supplementing your Retirement with a Guaranteed Universal Life Policy

A universal life policy is a type of permanent life insurance, different from term life, which expires after a set number of years. It’s also slightly different from its permanent counterpart, whole life insurance, in that it’s more flexible. A guaranteed universal life policy has a fixed death benefit and level cost outlined to a specified age such as to age 90, 95, 100, 110, or 121.

Here are the benefits of guaranteed universal life insurance:

• Very reasonable in cost compared to other permanent life insurance.
• Works like term life, with fixed coverage up to a specified age (rather than a set number of years).
• Rates are fixed.
• Offers coverage up to age 121.
• Less volatile than non-guaranteed policies and less rigid than whole life insurance.

Key Benefit of Life Insurance: Tax-Free Money

Let’s say you instead decide to preserve and pass down your retirement funds. That would mean that you worked your whole life, contributed to a retirement fund, and made the selfless decision to leave the money to your spouse or heirs…only for them to be taxed on it.

Instead, you could get a guaranteed universal life policy, in which the death benefit would become your legacy. The key difference? The death benefit is paid to your family tax-free. The government does not tax life insurance, largely because the policyholder had already paid the premiums with their taxable income. As you’re probably realizing, the difference between passing down a taxed and untaxed legacy can be massive.

Example:

Here’s a hypothetical example to illustrate how life insurance works as a legacy.

Mike, age 63, is preparing to retire in 6 months. His biggest fear is that he won’t have enough money in retirement to sustain the lifestyle his family has established. He just finished paying for his oldest daughter’s wedding, and his youngest daughter just got engaged.

Just over 10 years ago, Mike’s 401(k) was prospering and life was great. But little did he know the 2008 recession would negate his early retirement plans and leave his financial future uncertain. Mike knows he needs to do something, but is not interested in an investment because he doesn’t want to risk losing what he has worked so hard for.

While researching his options, Mike came across the idea of getting a life insurance policy with a fixed death benefit and fixed premium. He spoke with a licensed agent, who helped him secure a guaranteed universal life policy with a fixed $300,000 death benefit up to age 95, and a fixed premium of $374 per month.

Now, Mike is able to spend his retirement money guilt-free, the way it was intended, while still leaving the tax-exempt death benefit for his wife and two daughters. He likes the idea of having a fixed bill every month and knowing that the stock market cannot deplete the money he intends to pass down.

Actual Rates for a Permanent Policy to Supplement your Retirement

Are you curious about how much a permanent life insurance policy would cost you until the age 90 or later? We've included some example rates below for a male and female for $100,000 dollars of life insurance coverage until the age of 90, 95, and 100.

These rates assume that the person applying takes a preventative blood pressure and cholesterol medication, but that they are in otherwise excellent health. If you have a few health issues, we can still help you find an affordable permanent life insurance policy.

Feel free to give us a call at 855-247-9555 for a more accurate quote. By working with dozens of highly-rated life insurance companies we'll be able to find the best options available to you.

$100,000 to Age 90 or Later - Female Rates - Ages 55 to 75

*Monthly rates are accurate as of 03/07/2023 and are provided for illustrative purposes only. 

$100,000 to Age 90 or Later - Male Rates - Ages 55 to 75

*Monthly rates are accurate as of 03/07/2023 and are provided for illustrative purposes only. 

Talk to An Independent Agent

A final word of advice: when you’re shopping for life insurance, you should work with an independent agent, rather than a captive agent at a big-name provider. Aside from being more specialized in life insurance, independent agents can shop multiple carriers, enabling them to get you better coverage at a better price.

At JRC Insurance Group we work with over 50 top-rated life insurance companies and our service is free. In just a few minutes we can shop the market to find the best life insurance options available to you, saving you time and money. Give us a call today toll free at: 855-247-9555 or request a free quote online here.