President Trump signed an executive order on Friday that will make it easier for small businesses to form retirement fund collectives. Workers that previously didn’t have access to employer retirement plans may now be more likely to get them. In the same order, the President directed regulators to reassess rules on retirement fund distributions, which could help to stretch them over a longer period.
This was positive news for people who are soon to retire, and especially for young people who are just beginning to save. A 401(k) or similar plan can be an essential savings mechanism, and it is recommended that you enroll into one if it is offered at your workplace.
In addition, there are other options to build retirement wealth, and Cash Value Life Insurance is one of the most effective. This type of insurance is worth considering if you want to grow your wealth while also leaving a safety net for your spouse or family members.
How Cash Value Life Insurance Works
This type of insurance is made up of two components. A cash component, and an insurance component. Take for example a $1 Million insurance policy that has a 50:50 split of both components.
$500,000 would be life insurance, whereas $500,000 is a cash component made up from contributions over time. You can’t withdraw the cash component until you have made a certain number of contributions. The time it takes to do this will depend on how old you are when you start the policy, and the amount that you are paying in terms of premiums.
Because premiums are contributing both to the insurance component and the cash component, they will typically be higher than standard life insurance. However, because the savings can later be withdrawn, this is still an ideal way to supplement retirement income.
Most policies are flexible when it comes to withdrawals. Lump sums, smaller payments, and distributed payments can be arranged with most insurance providers. If you are interested in purchasing a policy of this type, it’s important to check the withdrawal rules and ensure that you will have options when you retire.
Consider All of the Available Retirement Funds
Whether based on a 401(k), an IRA, or even a managed investment portfolio, your retirement planning should be comprehensive. The more savings and investments you have, the more comfortable your retirement will be. Cash Value Life Insurance is underutilized, but the simplicity of saving and paying for life insurance at the same time should not be overlooked.
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