IRA’s and 401k’s are important investment strategies for saving and accumulating wealth, but they can cause a lot of headaches after retirement. For starters, there is only an eleven-year window for which people can withdraw from their retirement accounts without penalty. If someone withdraws too early (before the age of 59 1/2), they will face a 10% penalty. If they withdraw too late (after age 70 1/2), they will face a 50% penalty. Even when people begin to take distributions from their IRA or 401K within the penalty-free window, they will still lose almost one-third of it to taxes.

Additionally, many people may find themselves in a higher tax bracket after retirement because they are no longer receiving the same tax deductions they received while working. Their children are grown, so there are no more dependent deductions. Their business write-offs are also gone, and they are no longer contributing to their IRA or 401k to get a pre-tax reduction in income. This not only leads to a sizable chunk of their income going to taxes, it also puts them at risk of running out of retirement money.

For example, if someone in a 25-30% tax bracket wants to earn a net annual income of $50,000 after retirement, they would need to withdraw $65,000 to offset the 30% they'd have to pay in taxes. If this person starts off with $500,000 in their retirement account and a 10% interest rate, they will run out of money in less than 10 years. However, It is not recommended that people put more money into these retirement vehicles beyond what their employer matches. Instead, they should invest their extra money into a permanent life insurance policy.

A permanent life insurance policy gives people access to various tax-free benefits such as tax-free growth, tax-free access via loans, and tax-free wealth transfer, all of which are compliant with Internal Revenue Codes and tax laws. This level of liquidity would give people control over their own money and allow them to use it in any way they see fit. It is safe and protected from market losses, and it provides a rate of return that can outpace inflation. Unlike IRA's and 401k's, there is no contribution limit. So, people can contribute as much as they’d like to their policy, and the money will continue to grow uninterrupted, earning compound interest even if they borrow against the policy using tax-free loans. More importantly, it provides the supplemental retired income people need and deserve.

In order to achieve the best results from a permanent life insurance policy, working with an appropriately trained agent is imperative. That's why working with Rancho Cucamonga Life Insurance is the right choice for anyone who qualifies for life insurance. Every insurance agent at Rancho Cucamonga Life Insurance has received extensive training in maximally funded and properly structured policies, to ensure that optimal results are achieved with every client.