When it comes to deciding where to allocate your hard-earned assets towards retirement, ask yourself these questions:
Tax-Deferred or Tax-Free?
Stock Market Downside Risk or No Downside Risk?
In other words, would you choose a Tax-Free Retirement Plan with NO DOWNSIDE MARKET RISK over a Tax-Deferred Retirement Plan with 100% RISK? John Nunes Financial & Insurance Services believes that most people would. The problem is that most people do not know this type of plan exists. Our mission here is to change that.
During the Global Financial Crisis of 2007-2012 ("Great Recession"), millions of Baby Boomers lost over half of their retirement funds just as they were ready to retire. What's even worse is that they will pay almost half of what is left in state and federal taxes. Why? Because they were in a Tax-Deferred, 100% Market Risk financial vehicle (such as a 401(k) or a Traditional IRA).
Having watched the events of the Great Recession that forced many Baby Boomers to delay or downscale their retirement, those in today's work force have looked for a better way to build their retirement accounts. That "Better Way" is to provide a vehicle that provides:
1) Upside Potential With GUARANTEES
2) Downside Protection Against MARKET DOWNTURN
3) LIFETIME STREAM OF INCOME at Retirement.
There are four key factors today that will impact retirement:
- Social Security
- The National Debt
- The Stock Market
Understanding the risk factors that can come between you and your ability to retire how and when you want is an important step toward meeting your retirement goals. To help increase the likelihood that you’ll have the funds you need when you reach retirement age, keep these four risk factors in mind:
"The Tax Exemption for life insurance is the single biggest benefit in the tax code."
-Ed Slott, CPA
The combination of rising medical costs, higher life expectancies, and the number of baby-boomers who file for Social Security every day is quickly making our Social Security system unsustainable.
As of 2017 we will begin paying out more in benefits than we collect in taxes.
The "official" national debt is over $19 trillion, but the "real" national debt which includes all unfunded liabilities (which include Social Security and Medicare) is currently more than $118 trillion.
The national debt has been growing at a rate of $1-2 trillion each year for the past 5 years. That is over $395,000 for every man, woman and child in America and over $1 million per tax-payer.
For more information on the United States National Debt, click here.
The only way for the U.S. government to combat our massive debt and honor our social security commitments is to either cut spending or to increase taxes. Which do you think is going to happen? The majority of Americans today do not believe that the U.S. Government will reduce spending, and they believe taxes will increase the way they have in the past when the country has experienced a prior economic crisis.
As this chart illustrates, tax rates have been as high as 94%, and with our current top marginal tax rate relatively low (currently around 39%), the likelihood of a tax rate increase to combat our massive debt seems to be inevitable.
Between August 2007 and February 2009 the S&P 500 dropped 48% and hundreds of billions of pension and retirement plan dollars evaporated. For those who were at or near retirement, the impact of this vanished wealth has been devastating. Virtually overnight, Baby Boomer retirement funds lost almost 50% in value, and millions of people who thought their retirement years were secure have been forced to continue working or to rethink what "retirement" means for them and their families.
Why did this have to happen to so many people who thought they were ready to retire? Because they did not have the knowledge to know that there are products that can eliminate risk from their retirement portfolio.
With the traditional ways of planning for your retirement (401k, IRA, Pensions to name a few), all of the key factors that affect retirement come into play. But what if there was a way to eliminate maybe one or two of those key factors from affecting your retirement? Depending on whether you are working with pre-tax or after-tax funds, you can definitely eliminate one or two of those factors.
The graph above shows the real numbers for the S&P 500 from September 2000 through the closing numbers of December 2018. As you can see with the blue and red lines, the red line indicates the actual returns of the S&P 500, while the blue line represents a Risk Protection product with a 0% Floor and a 12% cap.
This Risk Protection product was able to zero out all of the negative years because of the 0% floor, and although the 12% cap does not allow you to benefit from 100% of all market gains over the cap, you still outperformed the S&P 500. That means if you invested $100,000 into this Risk Protection product vs. investing that same $100,000 directly into the S&P 500, the difference after 18 years would be $313,497 for the Risk Protection product vs. $246,507 for the S&P 500, a difference of $66,990!
This Risk Protection product allowed you to eliminate two key factors that affect your retirement: STOCK MARKET VOLATILITY & TAXES.
So, the choice is yours. Do you trust your hard-earned retirement money into a vehicle that gives you opportunities to participate into 100% of all gains as well as the risk of participating into 100% of all losses, or do you allocate your money into a vehicle that protects you from all risk with a 0% floor and allows you to participate into market-like gains with a 12% cap?
What is this Risk Protection product that gives you guarantees with upside potential, protection against market downturn, AND tax-free retirement?
This product is called Indexed Universal Life (IUL).
Tax Free Retirement With Indexed Universal Life (IUL)
Tax Free Retirement is an after-tax savings strategy that uses Indexed Universal Life as the vehicle that allows you to:
Create a Tax Free Retirement
Benefit From the Upside Gains In The Market Without the Risk of Market Downturn (Safety of Principal With Upside Potential)
Have "Peace of Mind" Knowing Your Retirement Money Is In One of the Safest Savings Vehicles Available Today
If Properly Funded, A Guaranteed Lifetime Stream of Income
Provide Heirs With An Instant Estate, Tax Free
Full Living Benefits Where You Can Access Your Policy's Benefits While You Are Still Alive in the Event of a Chronic, Critical, or Terminal Illness, and Disability
Buy ONE IUL policy with LIVING BENEFITS that covers all of these areas with one low premium vs. FIVE individual policies with FIVE individual premiums. PLUS, cash value distributions are TAX FREE!
Option #1: Buy 5 individual policies to cover all of these areas (which is very expensive)
In addition to all of the Tax Free Retirement benefits, the IUL product provides benefits for Critical Illness, Chronic Illness, Terminal Illness, Disability and Retirement all in ONE policy rather than the costly alternative of owning individual policies for each.
This all-in-one approach, along with the ability to access the death benefit while the insured is still alive, is what we call "Life Insurance You Don't Have To Die To Use", and they are part of a category of life insurance that include what we call "Living Benefits". Tax Free Retirement and Living Benefits, the best of both worlds.
Below is a side-by-side comparison of the traditional approach to funding your retirement (tax-deferred using pre-tax dollars) and the non-traditional approach provided by J. Nunes Financial (tax-free using after-tax dollars). Seeing the difference, which would you prefer:
TAX DEFERRED or TAX FREE?
Tax Deferred Retirement
Limits The Amount of Money You Can Contribute Towards Retirement
No Early Access To Your Money Before The Age of 59 1/2 Without 10% IRS Penalty & Applicable Federal and State Income Taxes
Accounts Funded Through Stocks or Mutual Funds Subjects You To ALL Inherent Market Risks Including Market Losses
Subjects You To Taxes On ALL Monies Deferred Plus Taxes On ALL Gains Which Could Push You Into A Much Higher Tax Bracket At Retirement
Forces You To Begin Taking Distributions No Later Than Age 70 ½ Whether or Not You Want To
Subjects Your Social Security To Increased Taxation Since Distributions Are Treated As Additional Income
Subjects Your Heirs Up To 50% or More In Taxes Upon Your Death, AND The Amount Available To Them Is Based On The What Is Left In Your Account At That Time
Retirement Accounts Are Vulnerable To Judgments or Liens
Tax Free Retirement
No Limitations On The Amount of Money You Can Contribute Towards Retirement
Allows Access To Your Money At Anytime Without Taxes or Penalties
Gives You Access To Market-like Returns With No Market Risk AND Guarantees You Will NEVER Take a Market Loss
Provides Tax Free Income At Retirement
Allows You To Decide If AND When You Would Like To Take Distributions
Does NOT Subject Your Social Security To Additional Taxation Since Distributions Are Considered "Loans"
Provides a 100% Income Tax Free, Lump Sum Payment To Your Family At The Time of Your Death
Protects Your Retirement Accounts From Judgments or Liens (In Most States)
TAXED ON THE HARVEST
You pay tax on 100% of all monies deferred plus taxes on all gains in the taxed deferred account at the time of distribution at retirement
(NO TAX ON THE SEED; TAXED ON THE HARVEST)
TAXED ON THE SEED
Since you used after-tax monies to fund this account, it provides 100% tax free income since distributions are considered loans.
(TAXED ON THE SEED; NO TAX ON THE HARVEST)