What Is Retirement Planning?
Retirement planning is an important part of a person’s financial planning. Retirement planning aims to make our lives directed so that we can live prosperously and free from stress because all things related to the future (old age) have been well organized.
People often think that retirement is a matter for later because it is still far from reaching retirement age. If it is assumed that a person graduates from college at the age of 25 years, and will continue to work until retirement at the age of 60 years, then of course there are up to 35 years to prepare for retirement. However, a life insurance retirement plan must be planned long before the retirement period arrives.
The Benefits Of Having Tax-Free Income During Retirement
Generally, it is best practice to allow money with a more favorable tax treatment to remain invested as long as possible to extend those tax benefits. The advantage of having a tax-diversified asset mix once you retire is that it helps you manage your tax burden from year to year, according to your circumstances. In any given year, your strategy could include:
• Withdrawal from a workplace retirement plan or IRA funded with fully taxable pre-tax contributions
• Distribution of traditional IRAs where some are taxed
• Sales of taxable investments where taxes may or may not be due
• Withdrawals from a Roth IRA are non-taxable and do not increase your taxable income
Managing income levels effectively in a given year can help limit the amount of tax that must be paid in that year. Depending on your income level, some of your Social Security benefits may be subject to federal income taxes.
How Does Life Insurance Provide Tax-Free Income?
Insurance has become commonplace nowadays. However, it turns out that the level of public awareness of this financial need is still low. Even though having insurance, especially life insurance, has many benefits, one of the best is to provide tax-free income.
The workflow of unit-linked life insurance can be explained as follows:
The initial premium paid by the policyholder will be allocated starting from protection to being deducted to pay for acquisition costs. This acquisition cost is the fee charged to the customer when purchasing the policy. This fee is usually used to pay for the company’s operational activities, including commissions for life insurance marketers.
In addition, insurance premiums are also included in the selected investment instrument. Several premiums that are put into this investment instrument then generate investment returns. The proceeds from this investment will later be used to pay for insurance costs, additional insurance costs, and administrative costs.
Who Can Benefit From A Life Insurance Retirement Plan?
By having life insurance, we will feel the benefits of uncertainty in life. At least we can feel calm when the breadwinner in your family has retired or left us, then your family will have no financial difficulties.
Life insurance has evolved a lot from time to time, and all of them always offer a variety of services for the community. Products from life insurance are also not only for death but also for health, critical illness, accidents, and others according to the needs of each person.
