Tax-Efficient Retirement Planning
What if you max out your retirement contributions?
Option A:
Invest in a GIC
Invest the $1,500 in a Guaranteed Investment Certificate (GIC) every month. This potentially earns Amit $900 in interest based on a 5% return. However, he would have to pay approximately half the amount in taxes, leaving him with about $450 in profit. After 20 years he will have approximately $459,000 in total savings
Option B:
Invest in Whole Life Insurance
Invest the $1,500 in a Whole Life Insurance policy every month. Over a 20-year period, the amount Amit invests will become equity that will grow to approximately $588,000 and he can use as collateral for a loan or line of credit. He can access the full amount, let the investment grow, and he does not have to pay taxes on the interest he earns from the investment.
An Effective Investment for Retirement
By contributing to a retirement fund within a Whole Life Insurance policy, you create an insured retirement plan. You can use the policy as collateral for a loan or line of credit, which gives you access to the funds without facing huge tax implications. And you can use the policy’s equity to secure a loan to pay off the debt.
Refuse to Settle for Less
* Case study is based on real clients. Names have been changed for privacy.
