Are you nearing retirement and considering implementing the infinite thinking concept, but have the feeling that it’s too late?
I was talking to a guy this week who’s nearing retirement in only six months at age 58. He came to me with concerns about how to take his buckets of retirement assets and also implement the infinite banking concept with a policy. He wasn’t sure how the two worlds fit. When it comes to retirement money during the accumulation phase when you’re saving up and building up your pool of assets. It’s easy in the matter of all you have to worry about is saving. However, as you get closer and closer to retirement, the focus shifts from saving to: “How do I make sure these assets last and last me my entire lifetime?”
So you go from a mindset of “I’m willing to take some risk because I have some time to recapture any momentary losses” to a mindset of “I can’t afford to have any losses because retirement is right in front of me.”
As he’s nearing retirement and as anyone’s nearing retirement, you have to consider that your income is going to stop. And in this family, his income was $145,000. Now his wife is going to continue to work for an additional four or five years. But then her income’s going to stop also. We need to make sure these assets are going to last as long as they do.
So the real question is how do you make his money as efficient as possible so that he can reach all of his income and retirement goals?
Implementing the infinite banking concept in this person’s case could mean something very simple. Giving him permission to spend down his assets. Spend down those assets without worrying about sacrificing his wife’s livelihood should he pass before her and also his livelihood should she pass before him. Additionally, we could lock in a legacy piece for their two daughters.
So let’s think of this in two steps.
Step number one is to set up a policy on him so that his wife has survivor income generated from the death benefit in his policy.
Step number two is purchasing a policy on the wife which will give her permission to spend down all of the assets to supplement her retirement income and her survivor income needs without jeopardizing the legacy for their children.
Now we can’t forget that these are specially designed whole life insurance policies designed for cash accumulation. So what does that mean in this case? Well, by transferring some assets from these retirement income accounts, and using that money to fund life insurance premium, you’re moving money from at risk and forever taxable to safe money that’s never taxable, that you have access to, full liquidity use and control over so that as life goes on, you still have access to that money. And even after accessing that money, you’re not interrupting the compound interest curve on that safe pool of money.
And in our discussions with this couple, we found a few things. Number one, they want to travel. Well, they can borrow against their life insurance cash value to pay for their trips and then pay back those loans using their retirement income.
The other thing they want to do is every four or five years, they want to buy a new car. Again, they could buy the car by borrowing against the cash value of the life insurance and then make those payments back to the policy to replenish for the next vacation or the next vehicle.
So there’s a lot of things that they can do. And by the way, this is making their money more efficient because they’re not losing the opportunity cost by paying cash. Neither are they losing opportunity cost by financing directly with a bank or a credit company.
Another thing to consider that these policies can be used for is a volatility buffer. Since all of their money is in investments. There is risk associated with investments by nature. If for example in a down year, a year where the market went down, their account value went down, they still need to generate income because their income from their jobs has been turned off. They could instead borrow money against their life insurance policy so they don’t have to have a double negative in a year.
So there are a lot of reasons when you’re on the threshold of retirement where life insurance can really come into play and make your retirement better.
If you’d like to get started with an infinite banking concept policy, a whole life policy designed for cash value accumulation, schedule your free strategy session today.
And remember, it’s not how much money you make, it’s how much money you keep that really matters.
