Bruce, What are your preferred wealth management strategies? can share with our readers out here?
If you are young enough, nothing beats overfunding a permanent life insurance policy. In the industry, we refer to these products as “Investment Grade Life Insurance”. While all life insurance provides a death benefit for protection, that is NOT the primary purpose of this policy. We take advantage of IRS code 7702 to internally build cash value.
Let me give you an example. Working with a client in her 20’s, we set up a policy funded with $300 per month. When she retires, she will begin receiving a TAX-FREE INCOME of over $100,000.00 per year…for the rest of her life! Also, let’s not forget, this is life insurance at its core, so when she goes to sing with the angels, she will leave several million dollars for her beneficiaries.
However, that’s not the right strategy for everyone. As we get closer to retirement, we also get more conservative, putting greater value on conservation of our assets.
Once in retirement, a happy stress-free retirement is determined by guaranteed income. Social Security, pensions, personal pension plan, savings, etc., are all a part of that. We also need to account for inflation, taxes. And the potential of a chronic illness. It’s at this point that I like a mix of 10% liquid (savings, checking, money markets, etc.) for expenses and emergencies. I keep about 25% exposed to the market (stocks, bonds, mutual funds, REIT’s, etc.) to account for changes in taxes and inflation (this is for 10 or 20 years in the future). Finally, I keep about 65% in guaranteed income products (Fixed annuities, indexed products, etc.) for my lifetime stream of guaranteed income.
Remember, everyone is different. There is no “one size fits all” strategy; this is why you want to work with an experienced professional to help create your plan.