5 Reasons 85% of Fortune 500 CEOs Use (this) As Their Primary Retirement Planning Tool

If you’re looking to create a tax-free retirement for yourself, then this is something that you must understand.

85% of the Fortune 500 CEOs use this as their primary retirement tool for many reasons (which I’ll go over here in a minute).

Banks owns billions of dollars of it.

Corporations use it all the time to fund deferred compensation plans, to retain top talent, and as a way to reward key executives handsomely.

So why doesn’t everybody?

It’s a well-kept secret in the world of financial planning because it’s not understood by most of mainstream America (and quite frankly, a lot of people who sell it don’t really know what they’re talking about).

But wealthy people understand it.

They understand how to utilize the IRS tax code to minimize their tax bill.

They understand that if this tool is structured properly, it’s one of the most efficient ways to build generational wealth, retire tax-free, transfer wealth to your family tax-free, and even how to ensure that your social security check is never taxed in retirement!

If you haven’t figure it out by now, I’m talking about life insurance.

But not just any type of life insurance (it’s a very specific type that I’ll cover in another blog).

But the average American doesn’t understand the importance of owning some cash-value life insurance as a piece of their overall retirement strategy.

Here are 5 easy-to-understand reasons that you should consider having some life insurance as part (not all) of your retirement plan.

1) No Penalties for taking money out prior to 59–1/2 (complete accessibility)

Unlike traditional retirement accounts (401k’s, IRA’s, pensions, etc) there are no 10% penalties for taking money out of life insurance contracts prior to the recognized retirement age of 59–1/2, like most other retirement plans.

2) No 1099s

Money inside of these contracts is allowed to accumulate tax-deferred, just like most retirement plans. This allows you to accumulate wealth without having to pay unnecessary taxes year after year.

3) Distributions are not considered reportable income (no income = no taxes!)

Taking money out of these contracts in the right way allows you to fly completely under the IRS’ radar, meaning none of the money you pull out will be subject to income tax (because it’s not income). This also plays an important role in collecting your social security check completely tax-free, because money taken out of these contracts (like Roth IRAs) does NOT count as provisional income (which is how the taxes on your social security income are calculated)!

4) No Contribution Limits (of any kind)

This is where these plans have a distinct advantage over Roth IRAs. Roth IRAs limit the amount of money you can put into them each year, but with these insurance contracts, there are no limits. I know people who contribute $50/month to their policy, and people who put $200,000 per year into theirs (and everywhere in between).

5. No Income Limits (the main reason Fortune 500 CEOs use life insurance so frequently)

If you make too much money, you can’t even utilize a Roth IRA, so where do you put money to get the same type of tax advantages!? Roth IRAs were designed for investors with modest income, but life insurance becomes the go-to retirement vehicle for people with very high incomes, because are no income limits whatsoever. So your income can never disqualify you from funding and building wealth inside of an insurance contract.

Now don’t go running to put all your money inside of one of these types of insurance contracts just yet.

They are an important piece of a sound, tax-free retirement strategy, but they must be implemented properly as part of an overall financial plan.

But, if you don’t have at least some of your money going into a life insurance contract, you should certainly have a discussion with someone like me about how to implement this into your retirement plan (if it makes sense for you).