Tax-Free Retirement

How much of your investment income is tax-free?

At Mayfield & Associates, we strive to create solutions for our clients the both educate and simplify the main question when it comes to accumulation of wealth: “How to make it” and “How to keep it.”

Clients interested in working with us to develop long-term Income Planning strategies for well into retirement years that as tax-free are then often surprised to learn about a poorly understood strategy that is so very capable of (1) performing well as a tax saver, but also (2) an estate tax destroyer and (3) superior asset protection solution with cash value accumulation. 

Yes indeed, there is a single strategy that does all three. High performing Indexed Universal Life Insurance offered by some of the strongest financial sources in the world, A+ rated and over 100 years old (IUL’s) offer clients an extremely valuable solution. An average income earner who start’s early in life can build an asset that is impossible to duplicate at virtually any other time in their life. If you are fortunate enough to consider yourself an affluent individual, you’ll appreciate even more what you’re about to read.

Now, what is Indexed Universal Life Insurance? It is a form of life insurance that is offered as a strategy to allow clients enjoy the upside benefits of investment markets without experiencing the downside losses that come along with that degree of market risk. Gains are fixed and guaranteed so that policy owners never lose a penny of your hard earned assets when the market doesn’t perform. Income later in life at retirement from these policies is tax-free. Simply stated, IUL’s are fixed and have guaranteed interest that builds cash and multiple insurance benefits that are most always inside a tax-free envelope.

So just how significant is the wealth accumulation and subsequent distribution results of an A+ rated product and service? An example is the easiest way to grasp the difference. This example might astound you:

*Facts: An Indexed UL policy on a 40-year old male who contributes 6,000 annually for 25 years (a total of $150,000 thousand dollars). Then using a conservative assumed rate of 8% over 25 years stopping premium payments after the 65^th year creates Cash Value at 66 of $461,667 with a Death Benefit of $607,614. But that is not all, since the main goal was to create tax-free income; distribution could result in tax-free income of approximately $64,167.51 annually through your 100^th birthday with significant value remaining in the policy for the benefit of all beneficiaries.

Distribution is adjustable and can be controlled by the policy owner at all times.  

Now if that were all the news about IUL’s, it would be plenty. However these policies can also be used while the policy owner is still living for Chronic, Critical or Long-Term care issues that arise. Up to 75% of the face value can be accessed and used to offset expenses brought about by sudden life change or circumstances beyond your control.

So, you have wealth accumulation that at distribution is 100% tax-free and, catastrophic asset protection with a Death Benefit all in one product! 

Clients see two very large advantages: (1) the permanent death benefit that can be accessed during a chronic, critical or LTC demand, and (2) in the long-run, the higher “tax-free cash value” amount after 25 years compared to a “taxable investment.” Especially when you consider the certainty of increased taxes going forward experts suggest that it’s only smart to build incomes that grow in a tax-free environment.  In an IUL neither the “cash value increases” nor the “death benefit” is subject to income tax when built to perform as a non-modified endowment contract.

Let’s take a look at some other advantages of an effectively built IUL:

1. Liquidity: When needed, you can borrow a portion of the “cash value,” which can be paid back at any time or not at all depending on your circumstances. Any Interest paid back to your policy is tax deductible.

2. Asset protection: Your valuable assets are protected by the Accelerated Living Benefits of the policy providing you both short and long term financial protection.

3. Risk minimization: Insurance is a risk-shifting strategy in the event of a premature death, always supplementing the tax-free distribution results (at any age).

4. Flexibility: Tax-Free cash value growth inside an insurance product that establishes a floor during marker downturns and the ability to participate in market growth.

5. Low cost: When you compare an IUL to almost any variable investment, the cost is considerably less for a much more rewarding return.

6. What if: Your health or age prevents you from getting insurance, including an IUL? Then you can purchase an Indexed annuity. This type of annuity is similar to an IUL, except the income is deferred until the policy owner takes a distribution (non-taxable or taxable at ordinary income tax rates).

If you have a large investment portfolio, whether CDs, municipal bonds, older life insurance, annuities, stocks or any of the other endless parade of investment vehicles … then an Indexed UL is something you should look at. Your wealth is sure to compound at an accelerated rate because you won’t lose one cent in income taxes or capital gains taxes.

Steps to building a tax-free retirement in Gulfport, Biloxi, Long Beach, Ocean Springs, Hattiesburg, Jackson & Pascagoula, Mississippi as well as Texas, Louisiana, Alabama, Tennessee & Florida.