retirement savings

The IUL Advantage – Why You Need an Indexed Universal Life Policy

The IUL Advantage

With an indexed universal life insurance policy (IUL), you make premium payments like any other life insurance policy. Part of the premium pays for the cost of insurance and other fees, and the rest goes into a cash growth account. Universal life insurance was created in the late 1970’s as a vehicle for tax-deferred cash growth.  With an indexed universal life policy, the growth of the cash value is TIED to the growth of an index, frequently the S&P 500, but is not actually invested IN the S&P 500. When the index goes up, the cash value in the policy goes up, up to a Cap Rate (10-14.5%). When the index goes down, the cash value in an IUL stays the same because the account has a floor rate of 0%.  So, if the market goes up 10%, your cash value goes up 10%. If the market goes up 20% and you have a cap of 14%, your cash value goes up 14%. But when the market goes DOWN 15%, your account stays the same. There are never any losses due to the market. Tax-free distributions are received as policy loans. Standard loans are usually “wash loans.” The loans are secured by the cash value, which continues to grow at a fixed rate and offsets the interest charged for the loan. Variable loans are also available, where the loans are made at 4-6% interest, but that interest is offset by the indexed growth, which may be higher than the interest rate charged, allowing for extra growth due to arbitrage.

IUL’s have many advantages over other tools for saving money, especially when it comes to retirement savings. Here are the most important advantages –

1. Flexible deposits without annual limits.

2. Indexed growth – When the market goes up, your account goes up. When the market goes down, you don’t lose money.

3. You never lose money because of market losses.

4. Access to your money without income taxes or early withdrawal penalties at any age.

5. Tax-free distributions for life.

6. Living Benefits – Money to help pay costs related to chronic illness, long term care, or a terminal illness. This money comes from the death benefit, not your cash value.

7. A death benefit that pays income tax free to your family or other heirs.

8. During the most recent 30 years, the S&P 500 grew at an annualized rate of 8.39% (not including dividends). Using the index strategy in an indexed universal life insurance policy during the same period (with a cap of 14.5%) produced a rate of growth of 8.6% (after deductions for the cost of insurance).

Every IUL is custom made for my clients. Would you like to know what an IUL can do for you?

Get more information

Michael Goodman

Life Insurance Agent, Santa Clarita, California

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Workers Not Ready To Retire

(this article was originally published on

Most U.S. workers unprepared to meet retirement expenses, survey says

By Stuart Pfeifer, December 4, 2013

More than half of U.S. workers aren’t saving enough money to be able to cover essential living expenses in retirement, according to a survey by Fidelity Investments.

The savings survey found that 55% of people will have trouble covering housing, healthcare and food expenses, Fidelity said.

The online survey of 2,200 households, performed from June through October, measured whether workers were on track to cover their estimated post-retirement expenses.

Of those who responded to the survey, 33% were on pace to cover 95% or more of their estimated expenses, including discretionary expenditures such as travel and entertainment; 12% would be able to cover living but not discretionary expenses; 14% were not on pace to cover living expenses and would have to make modest adjustments to their retirement plans; and 41% were so underfunded for retirement they’d have to make significant lifestyle changes when they quit working.

“When you factor in the expectations many have of an early retirement, along with increasing longevity and sometimes overly conservative asset mixes for investments, you can see why many people are not as prepared as they need to be to cover their expected expenses in retirement,” said John Sweeney, Fidelity’s executive vice president of retirement and investment strategies.

Fidelity said workers can take several steps to improve their preparation for retirement, including: increasing the amount they’re saving, better allocating how their money is invested and deferring retirement.

“Although it requires discipline and some trade-offs, there are important steps people can take to accelerate their retirement savings and get closer to where they need to be in the long run, no matter what their age or income level,” Sweeney said.

The survey found that baby boomers (born between 1946 and 1964) were best prepared for retirement, on pace to save 81% of what they’ll need in retirement and those from Generation Y (born between 1978 and 1988) were least prepared. On average, the younger workers were on pace to have just 61% of the money they’ll need to cover retirement expenses.

“This number is a concern, since the survey indicated many anticipate retiring early, despite the fact they probably won’t have the benefit of a pension, as their parents did,” Fidelity said in a news release. “The good news for this generation: time is on their side, which means they can improve their situation by increasing their savings rate and investing for growth.”

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Not Saving Enough For Retirement?

This article was originally printed at,0,7495879.story

Wealthy in L.A. plan to save a lot for retirement, but haven’t yet

By Walter Hamilton, 11:24 AM PDT, October 28, 2013

Wealthy people in Los Angeles plan to save more money for retirement than the national average, while women are stowing away more than men, according to a new survey.

L.A. residents with $50,000 to $250,000 in household investable assets plan to save an average of $909,400 for retirement, more than the $736,200 national average, according to Merrill Edge, a consumer banking unit of Bank of America Corp.

Women are outpacing men, according to the report. They plan to squirrel away a bit more than $1 million versus $814,000 for men.

However, as with Americans of all income levels, they’ve put away only a fraction of that amount. The average L.A. resident has saved only $150,300, according to the report.

And they don’t have much time left to meet those lofty financial goals: The average L.A. poll respondent is 54 years old.

Perhaps not surprising, nearly two-thirds of L.A. residents — 64% — intend to retire later than anticipated. That’s an 18 percentage-point jump from Merrill’s last report six months ago.

In an apparent sign of growing retirement awareness, L.A. residents anticipate saving $377,400 more than they did six months ago.

As for college savings, the average wealthy Angeleno has saved, or plans to save, $62,000. However, one in three Los Angeles parents has saved nothing for their child’s education, according to the report.

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