Invests $15K a year until he retires, receives $250K+ tax free annually in retirement.
Name: Sergio M
Age: 31
Location: Bellevue, WA
Objective:
Sergio wanted to create a secure retirement for himself and his family and he was thinking a lot about whether he should get married in the future or not.
Situation:
Sergio’s roommate had an IUL he had gotten from me. His roommate told him about the power of an IUL for retirement planning. As a result, he went to someone to get an illustration. However, once he saw what the agent created for him, he realized it would never work the same way his roommate’s IUL was when it came to retirement income. So, he gave me a call and we set up a meeting.
He is what I call a super saver. When we first met he already had $100K save up and was saving $15K a year. He told me he wasn’t saving as much as he would normally because he was helping pay for his sister’s college education – a family tradition. He said once she graduated he would start saving more.
I told him I was not sure he needed to start saving more, based on what he already had on hand. That was very interesting to him, so he asked me to show him what I could do for him.
Better Money Method Approach:
I showed him how to combine the $100K he had on hand with the $15K he was saving each year. What he ended up doing was investing $35K annually into an IUL which I designed for 5 years. How? He took $20K from the $100K he had on hand every year and he added the $15K he was saving.
Starting in the 6th year he will save the $15K a year until he is 69 and then plans to retire at age 70. With this plan he will invest a total of $670,000 over the next 38 years. In his first year of retirement at age 70 he will get $250,000 a year tax-free. That is equivalent to receiving a $312,500 distribution in his first year of retirement from a 401(k) assuming a 20% tax rate.
Result:
His annual income will grow at 3% a year for the rest of his life after age 70 to keep up with inflation.
If he lives to age 85, between 70 and 85 he will receive a total of $5,039,000 in tax-free income from his original investment of $670,000. If he passes away at the age of 85 he will leave a tax-free estate of $4,208,700!
If he lives to 95 his total income between 70 and 95 is projected to be over nine million dollars tax free and he will still leave a tax-free estate of $3,358,000.
Clearly, Sergio was ecstatic to see that he did not need to increase his savings in the future. He was also relieved to see that if he DID decide to get married and have children his plan would still be adequate!
Contact me to find out if this approach can work for you too.
