When should you start saving for retirement? As soon as possible!
As you saw in the video, planting the seeds of retirement as early as possible can have a huge effect on how much you will have when you finally retire. Your saving should be consistent and thoughtful, taking into account your monthly budget and your retirement goals.
If your work provides a retirement plan that will match a portion of your contribution, that’s free money and you should probably take advantage of it. You can also set up your own account that will allow you to contribute even more. One thing to remember is that these accounts are invested in the market. Why does that matter?
Your money and potential retirement income could go down the drain in one fell swoop (see 2008-2009) and you may not have time to make up the losses. So having other sources to grow your retirement egg is crucial. Is there an account that you can contribute to that won’t lose money in the market? YES!
Another thing to consider is taxes: you will probably pay less taxes the younger you are because your earnings usually go up as you get older. Understanding how your retirement savings accounts are taxed is very important. Traditional accounts are not taxed as you put your money in, however, you will pay taxes once you start to take the money out. This is important because you will most likely be at the highest income bracket and consequently, pay the highest amount of taxes once you retire. So you need to have savings accounts that you won’t pay taxes on when you take your income out. Are there accounts that you don’t have to pay taxes on when you take the money out? YES!
What if your budget can’t afford all of this? You have life, health and car insurance, taxes, utilities, car payments, rent or mortgage… the list goes on and on. And what if you get sick or hurt and can’t work? Is there a way to still contribute to a retirement savings account? YES!
YES, YES, YES! What kind of account will let you do all of this and more? It’s an Indexed Universal Life (IUL) insurance policy with living benefits!
Let’s see why this may be the first place to start saving in your retirement account.
- An IUL uses part of your contribution to fund the pure cost of insurance and the rest goes into a side account that mirrors the market. If the market goes up, so does your account and if the market goes down, your account does not lose any value. It may not earn anything, but it won’t lose anything either. Unlike the market, there are limits or caps on the interest you can earn in your IUL, however, the limit of your losses is set at a floor of 0%, where the losses are unlimited in the market.
- There are actually two types of retirement saving accounts that you pay taxes on the contribution and not on the withdrawal. One is an IUL and the other is a Roth, which is either a 401(k) or an IRA. The difference being there are limits to how much you can contribute to the Roth and requirements as to when you can start to take money out and there are no limits for your contributions or withdrawal requirements for your IUL.
- An IUL with living benefits allows your contributions to multi-task. These policies will pay a financial benefit to your loved ones if you pass away too soon or have a critical or chronic illness. If neither of these happen and you get ready to retire, you can start to withdraw from the savings side (tax free) and have an income that you can’t outlive.
You know that you need, and your family deserves, a life insurance policy to pay off the home, send the kids to college and provide the funds needed for the final expenses if you pass away unexpectedly, so why not have one that can do all that and more?
With an IUL with living benefits, you can. Not all life insurance policies have these amazing benefits, so be sure to ask for information on how we can help your retirement saving account grow while reducing your taxes and supercharging your budget.