Retirement analysis 50 yr old- using 72t and IUL

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Information about Retirement analysis 50 yr old- using 72t and IUL
Business & Mgmt

Published on February 23, 2014

Author: bryandaly

Source: slideshare.net

Description

Age: 50
Qualified funds: $200,000
Concerns:
- Fear of investing funds in Wall St. accounts
- Cannot afford another 2008 market decline
- Uncertainty with Federal tax rates due to climbing debt
- Taxability of social security

Financial Strategy Analysis of Qualified Funds Meet John Age: 50 Qualified funds: $200,000 Concerns: - Fear of investing funds in Wall St. accounts - Cannot afford another 2008 market decline - Uncertainty with Federal tax rates due to climbing debt - Taxability of social security

Alternative 1 Traditional Mutual Funds

$200,000 Qualified Traditional Savings Age 50 $200,000 401K Move to IRA & Leave in IRA till age 65 (market risk) Age 65 $441,682 IRA Value (Vanguard Total Stock Market Fund) 5% Annual Withdrawal $22,084 Taxable Income - Taxes (30%) $15,459 After Tax Income

Vanguard Total Stock Market Index Fund

Vanguard Total Stock Market Index Fund $441,682 Account Value - $22,084 Annual Income Withdrawal (5%) Account Value After 15 yrs. $339,850 (-25% less)

Alternative 2 Utilizing: Indexed Annuity Provides: - Up-front bonus 8-10% - 6.5 – 7% Guaranteed Rate of Return - Guaranteed Lifetime Income Benefit - No Market Risk -Upside earnings with no downside risk

$200,000 Qualified Plan A Plan B Age 50 $200,000 401K Move to IRA & Leave in IRA till age 65 (market risk) Age 50 $200,000 401K Move to Indexed Annuity with 8% Bonus -New Value = $216,000 Invest in Indexed Accounts with No Market Risk Age 65 $441,682 IRA Value Age 65 $591,261 Annuity -IRA 5% Guaranteed Lifetime Annual Withdrawal $29,481 Taxable Income - Taxes (30%) $20,637 After Tax Income (Vanguard Total Stock Market Fund) 5% Annual Withdrawal $22,084 Taxable Income - Taxes (30%) $15,459 After Tax Income Plan A Income: $15,459 Difference $5,178 Plan B Income: $20,637

Benefits of Indexed Annuities

Guaranteed Income Values & Guaranteed Income for Life

Alternative 3 Utilizing: Indexed Annuity Plus Indexed Universal Life Insurance - Indexing returns 14% cap and 0% downside - Lifetime Life Insurance (tax-free benefit to heirs) - Living benefits – Including Critical, Chronic and Terminal Illness (heart attack, stroke, cancer) - Tax free growth and tax free distributions - No Market Risk -Compliance with IRS code 7702

$200,000 Qualified Plan A Age 50 $200,000 401K Move to IRA & Leave in IRA till age 65 (market risk) $216,000 IRA-8% Bonus Annuity $10,125 Net of taxes Plan B 72T IRA & Purchase IUL $426,000 Death Benefit Living Benefits Age 65: $24,232 Tax-Free Income + Age 65 $441,682 IRA Value Age 65 $243,947 Annuity -IRA 5% Guaranteed Lifetime Annual Withdrawal $12,197 Taxable Income - Taxes (30%) $8,538 After Tax Income (Vanguard Total Stock Market Fund) 5% Annual Withdrawal $22,084 Taxable Income - Taxes (30%) $15,459 After Tax Income Plan A Income: $15,459 Difference $17,311 Plan B Income: $32,770

72t Election

72T Analysis – No Tax Penalty on Withdrawal

IUL $426,000 Death Benefit $24,230 Tax-Free Income

Livings Benefits

14% Cap with 0% Floor 3% Guarantee S&P 500 Index

Guaranteed Income Values & Guaranteed Income for Life

$10,125 Annual Contribution $24,230 Annual Tax-Free Income

Illustration

Age 100: $848,050 Tax-Free Income $447,570 Tax-Free Death Benefit

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