Alan Porter-Certified Financial Fiduciary

Many people ask me what's better than a 401(k) or a qualified plan for retirement. Financial advisors and some popular financial personalities often tout them as the best option. They might promise high annual returns, tax deductions, and a comfortable nest egg by retirement.

However, there are some key points to consider:

• Market Averages: The stock market doesn't historically average over 10% annually. For example, the "Lost Decade" (2000-2010) saw a loss of over 4% when fees are factored in.
• Fees Matter: A seemingly small 1% fee over 30 years can significantly reduce your returns. The average 401(k) fee in the US is a hefty 2.99%. This means many people have less than half their money left by retirement.
• Losses and Recovery: A 50% loss in your investments requires a 100% gain just to break even.
• Retirement Focus: In retirement, it's not just about the average return on your investments; it's about distributing your assets effectively and achieving actual gains.
• Tax Considerations: While you get a tax deduction now, taxes may rise in the future due to national debt. Additionally, most tax deductions disappear in retirement. You likely want to maintain or improve your standard of living, which requires considering future expenses like healthcare.

Retirement Risks Beyond Market Performance:

• Sequence of Returns Risk: Poor market performance early in retirement can significantly impact your portfolio's longevity.
• Government Tax Risk & Market Risk: These are significant threats to your retirement security.
• Longevity Risk: Living longer than expected depletes your retirement savings.

Financial Advisors and Fees:

It's important to note that financial planners often get paid a fee on your portfolio, regardless of its performance.

Introducing Cash Value Life Insurance as an Option:

While not the only option, some financial professionals believe cash value life insurance offers a tax-advantaged alternative for retirement savings. Here are some potential benefits:

• Tax Advantages: Grow your money tax-deferred and potentially tax-free in retirement. This can save you significant amounts on taxes.
• Social Security and Medicare Protection: This strategy can potentially minimize taxes on Social Security and Medicare Part B premiums.
• Lawsuit and Judgment Protection: Cash value life insurance offers asset protection benefits.
• Self-Directed Borrowing: Borrow from your policy and pay yourself back with interest, potentially at a lower rate than traditional loans.
• Probate Avoidance: Life insurance benefits typically bypass probate, simplifying the inheritance process.
• Reduced Retirement Risk: This strategy aims to mitigate some of the sequence of returns risk associated with stock portfolios.

Learn More:www.strategicwealthstrategies.com

If you'd like to learn more about cash value life insurance as a retirement tool, you can schedule a consultation.

Important Note:

This article is for informational purposes only and shouldn't be considered financial advice. Always consult with a qualified financial professional to discuss your specific situation and retirement goals.