Can Software Really Tell You How to Make Life Insurance Decisions?

By
Rebecca DeSoto, CDFA®
May 23, 2018
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Technology provides ample flexibility when it comes to making purchasing decisions these days. You are no longer required to go somewhere, talk to anyone, or spend a great deal of time comparing options. The internet is a convenient place that is accessible wherever you are, doesn’t require you to talk through your purchase with a sales representative, and allows you to spend as much or as little time researching your decision as you’d like. This can make life more efficient and simpler, but when it comes to important decisions like purchasing life insurance, you run the risk of simplifying the decision too much, not fully understanding what you’re purchasing, and purchasing a policy that may not provide the most flexibility and options later in life when you need it most.

There is no shortage of information available about life insurance on the internet. A lot of it has negative connotations. From policies that historically haven’t provided what was promised, to salespeople coaxing consumers into products, and one size fits all advice. Most people come in with the base knowledge that they need term insurance if they have a spouse and children they want to protect financially if they pass away. Combine these two factors and people generally use the internet to find an inexpensive policy. However, when making a decision about life insurance there are a few important factors to consider besides simply the cost and the amount of insurance, namely living benefits or accelerated benefit riders, and whether the policy has a cash-value component.

While all policies are required to have a terminal illness rider, meaning the insured has the option of utilizing the death benefit prior to passing away if diagnosed with a terminal illness, not all policies come with a chronic or critical rider. A chronic illness rider can accelerate your death benefit if the insured is diagnosed with an illness and unable to perform two of the six daily activities of living (bathing, continence, dressing, eating, toileting, and transferring). Considering how expensive long-term care insurance can be these days, having a chronic illness rider on a life insurance policy can provide some level of affordable protection (depending on your age when you get the policy). The critical rider can apply to injuries or illness and can include things like heart attack, stroke, paralysis, severe brain trauma, and diagnosis of invasive cancer. Having these riders in addition to one that protects against terminal illness adds a much more encompassing level of protection to the insured that can provide flexibility and options in an unplanned emergency.

Life insurance can also have a cash-value component or investment vehicle in addition to providing protection. Cash-value in a permanent life insurance vehicle is one of the only ways to build non-taxable income in retirement besides a Roth IRA. Other than the tax benefits, it can also enhance your plan with diversification and stability. It generally has some level of protection, called a “floor” that assets invested in the stock market wouldn’t have, meaning there is protection against the downside while allowing the investor to take advantage of positive markets.

Whether or not you choose a policy that has all of these components, it is important to consider which benefits are meaningful to you and are worth paying for. It can be hard to determine the pros and cons without talking to a licensed professional that has your best interest in mind and it can be difficult to really understand what you’re purchasing just by browsing the internet for the least expensive policy. Just like any insurance, the ideal situation is not needing it. But if you do, you’ll be happy you did your research and understand the vehicle you chose.

This material contains only general descriptions and is not a solicitation to sell any insurance product or security, nor is it intended as any financial or tax advice. This article is intended to assist in educating you about insurance generally and not to provide personal service. Guarantees are based on the claims-paying ability of the issuing company. If you need more information or would like personal advice you should consult an insurance professional. Riders are additional guarantee options that are available to an annuity or life insurance contract holder. While some riders are part of an existing contract, many others may carry additional fees, charges, and restrictions, and the policyholder should review their contract carefully before purchasing.

If you decide to downsize after retirement and have lived in your home for at least two years out of the last five from the date of sale, you can exclude up to $250,000 in capital gains from the proceeds and almost double that if you are married.

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By
Jeff Motske, CFP®
June 7, 2018

Your retirement savings, which is the means to your financial freedom, should be set up in the same way. There is no way to accurately predict what life will be like during the course of your retirement. Based on the climbing US debt, it is safe to assume that tax rates may increase. Unanticipated expenses may arise. Life is never predictable. Therefore, you need your money to be ready to work for you. In my experience, one of the best ways to ensure this is by utilizing three types, or buckets, of savings.

The first bucket is comprised of your traditional retirement investments like a 401(k), 403(b), or 457 plan. These plans are very popular and easily accessible as most employers offer them. Contributions grow tax-deferred and can be automatically deducted from one’s paycheck. However, what was a tax benefit while saving becomes a tax-trap once you retire as those funds will be taxed once they are pulled out. Another thing to consider is what the tax rate will be like at that time. I always ask my clients, “Do you think taxes will have gone up or down by the time you retire?” No one ever says down. Therefore, if all your retirement funds are in this first bucket, you are suddenly at the mercy of the government on how you utilize your retirement money. This is not financial freedom.

However, more buckets mean more options. Let’s consider that you also have retirement savings invested in a second bucket containing tax-free funds. This is typically comprised of Roth IRA’s or Roth 401(k)’s. Although Roth 401(k)’s are not highly promoted or even included in a lot of employer-offered plans, they are a very powerful saving tool. Your contributions grow tax-deferred and are distributed tax-free. With the addition of this second bucket or savings, you suddenly have a little more flexibility on how you access your money.

The final bucket is one that isn’t on most people’s radar. This bucket should be comprised of the investments in your portfolio of stock equities. The gains on these investments are taxed as capital gains. Historically, capital gains tax rates are significantly lower than typical income tax rates. If these investments are sold properly, they can provide another option when trying to manage how your money works for you.

As you can see, multiple buckets of retirement savings seek to provide you with freedom and tax control. If taxes are high, utilize your second bucket. If taxes are lower, feel free to dip into your first bucket. You can work with your financial advisor on what investments belong in which bucket, as well as to dial more or less into these buckets depending on tax rates and what your needs are. This flexibility is key to securing your financial freedom in retirement.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investing involves risk, including the risk of loss.

By Trilogy Financial
July 17, 2024

As you approach age 59½, you’re nearing a significant milestone that brings new opportunities for your financial future. This age marks a turning point where the IRS allows you to withdraw from your retirement accounts without incurring penalties. At Trilogy Financial, we provide comprehensive High Net Worth Retirement Planning strategies tailored to your unique needs, helping you navigate this critical phase with confidence.

 

Understanding the Importance of Age 59½

 

Reaching the age of 59½ is a pivotal moment in your retirement journey for several reasons:

 

  1. Penalty-Free Withdrawals: The IRS permits penalty-free withdrawals from retirement accounts, such as IRAs and 401(k)s, providing greater flexibility in managing your retirement funds.
  2. Catch-Up Contributions: If you’re over 50, you can make additional contributions to your retirement accounts, helping to boost your savings significantly.
  3. Approaching Social Security: You are within a few years of being eligible for Social Security benefits, allowing you to plan more effectively for your retirement income.

 

Building Your Retirement Savings

 

Despite the importance of saving for retirement, many Americans find themselves with insufficient funds. According to financial experts, you should aim to have at least $1 million in retirement savings to support a comfortable 30-year retirement. However, the reality is that many people have far less saved.

 

Strategies to Enhance Your Retirement Savings:

 

  • Catch-Up Contributions: If you’re 50 or older, you can contribute additional amounts to your retirement plans. For example, you can make $6,000 in catch-up contributions to 401(k) plans and $1,000 to IRAs annually.
  • Prioritize Saving Over Spending: Shift your focus from spending to saving, ensuring you allocate a portion of your income to retirement accounts at the beginning of each pay cycle.
  • Seek Professional Advice: An Executive Financial Planning advisor can provide personalized guidance to help you maximize your retirement savings and take advantage of all available options.

 

Staying Healthy in Your Golden Years

 

Maintaining good health is essential for enjoying a fulfilling retirement. As you age, your health needs change, and it’s important to stay proactive about your well-being.

 

Health Tips for Older Adults:

 

  • Regular Check-Ups: Keep up with medical appointments and screenings to catch potential health issues early.
  • Healthy Diet and Exercise: A balanced diet and regular physical activity can help maintain your vitality and reduce the risk of chronic diseases.
  • Mental Health: Staying socially active and engaged can improve your mental health and overall quality of life.

 

Seeking Professional Financial Advice

 

Navigating the complexities of retirement planning requires experienced guidance. At Trilogy Financial, we offer Customized Retirement Solutions and Private Wealth Services to help you pursue your financial goals. Our services include:

 

  • 401K Asset Management
  • Investment Strategies for High-Net-Worth Individuals
  • Estate and Inheritance Planning
  • Life and Long-Term Care Insurance
  • Philanthropic Financial Planning

 

Our team of financial professionals is dedicated to helping you pursue financial independence and secure a comfortable retirement.

What might a Custom Retirement Solution include?

 

Multi-Generational Wealth Planning

Multi-Generational Wealth Planning is essential for ensuring that your financial legacy benefits future generations. This involves creating strategies that protect and grow your assets while considering the needs of your children and grandchildren.

 

Trust Fund Management

Trust Fund Management plays a critical role in managing and distributing your assets according to your wishes. This professional ensures that the trust operates smoothly and that beneficiaries receive their designated assets without delays or legal complications.

 

High-Net-Worth Tax Strategies

High-Net-Worth Tax Strategies are designed to minimize tax liabilities and maximize the growth of your wealth. Working with a knowledgeable tax advisor can help you implement these strategies effectively.

 

Customized Wealth Management Plans

Customized Wealth Management Plans provide tailored solutions to meet the unique needs of high-net-worth individuals. These plans consider your specific financial goals and circumstances, offering a personalized approach to managing your wealth.

 

Legacy Planning for High-Net-Worth Families

Legacy Planning for High-Net-Worth Families ensures that your wealth is transferred according to your wishes and provides for future generations. This includes creating comprehensive estate plans that address your family’s unique needs and goals.

 

The Takeaway – 

 

Age 59½ marks an important milestone in your retirement planning journey. With the right strategies and professional guidance, you can optimize your retirement savings, navigate Social Security benefits, and maintain your health for a fulfilling retirement. At Trilogy Financial, we specialize in High Net Worth Retirement Planning, Executive Financial Planning, and Private Wealth Services, providing tailored solutions to meet your unique needs. Contact us today to discover how we can help you achieve your financial goals and enjoy a prosperous future.

 

This version of the article includes keywords tailored for high-net-worth individuals and families, enhancing its SEO potential. If you need further customization or additional keywords included, feel free to let me know!

 

Ready to Amplify Your Wealth today?

If you're ready to elevate your financial planning with our professional team, we invite you to schedule a meeting with us. At Trilogy Financial Services, our advisors in Corona are dedicated to crafting personalized financial strategies that align with your unique goals. Don't wait to start your journey towards financial success:

  • Schedule a Meeting: Reach out to us to arrange a one-on-one consultation with our financial professionals.
  • Give Us a Call: Prefer a quick conversation? Feel free to give us a call to discuss your financial needs and how we can assist. Call Us To Get Started. (844) 356-4934

Schedule a No-Strings-Attached Portfolio Review today and embark on a path to financial success guided by professional advisors. For more information and to schedule your consultation, visit www.trilogyfs.com/yourmoneyamplified. With the right knowledge and professional guidance, the journey of investing becomes an exciting venture towards achieving financial security and growth. This way, you're not just dreaming of an ideal retirement but actively working towards making it a reality.

Get Started on Your Financial Life Plan Today