This example isn’t meant to highlight that utilizing investments for retirement planning is necessarily bad. It is also clear that some timeframes would yield excellent results, just as others would yield even worse results than those shown for George. Of course, a mix of stocks and bonds would have likely yielded much different results for both. However, even the price action and yield of bonds can be erratic and unpredictable. These examples are simply meant to illustrate that a large factor in the success of one’s traditional retirement plan is not within their control. If market returns happen to be lower in the early years of passive income, the individual drawing on their capital is significantly more likely to run out of money. For those that don’t want to risk living off of less, going back to work, or relying on others to supplement their income, a whole life policy is an excellent way to diversify & solidify a retirement plan.

Whole life insurance can either be an excellent supplement, or main source of retirement income. By contractual design, the accumulated capital in a whole life policy is always growing and is backed by the general ledger of the insurance company. Without delving into the incredible tax advantages these policies offer, we can instead focus on how they can provide a foundation of stability to help retirees supplement their income, and weather the ups and downs of the stock market. Below is another illustration with George, but instead of continuing to draw on his capital in down market years, he takes an equivalent policy loan from his whole life policy.

George

As you can see, George has nearly 3 times as much capital remaining as he does compared to when he continued to draw from his market-based accounts in down years.

Many of our clients choose to completely forego the uncertainty of their traditional retirement accounts and rely solely on their whole life policies for an ever-growing, guaranteed, and tax-free source of income later in life. Taking the exact same starting pool of capital, the owner of a whole life policy can typically draw quite a bit more money in their golden years than they would have otherwise from traditional retirement accounts.

Most Americans saving for retirement give up a percentage of their income each paycheck that they cannot easily access until age 59.5 (as of 2023). Premature withdrawals are subject to penalties, taxes, and a severing of the compounding action. Perhaps the greatest benefit to building a warehouse of wealth to deploy in retirement years is that it can be used now, without penalty, and without interrupting the compounding process!

If you would like to see what this would look like in your life or would like to discuss any of the myriad of other benefits of incorporating the Infinite Banking Concept into your retirement plan, please schedule a free, no obligation call.