Life Insurance Retirement Plan vs. Roth IRA
All retirement plans have their benefits and drawbacks. The most common forms of retirement investment are Life Insurance Retirement Plans (or LIRPs) and Roth IRAs. Both have upsides that can make an enormous financial impact on your retirement, and either are valid choices, but how do you choose what’s right for you?
If research isn’t enough, call in the professionals for help. Matador Insurance is dedicated to informing your decisions, since retirement isn’t something worth gambling on.
What’s the Difference between a LIRP and an IRA?
A Life Insurance Retirement Plan is a strategy that uses excess contributions to a life insurance plan as a source of cash value or a savings source to take out a loan against. This sort of retirement plan is often chosen by people with plenty of money to invest over the minimum payment for the life insurance policy.
A Roth IRA is a more common type of retirement policy. When you contribute to a Roth IRA, your money grows without being reduced by income taxes. Often employers will match contributions to these sorts of accounts, sometimes doubling the amount of money that is contributed to the account.
All pre-tax investment strategies, like a Roth IRA or 401k, stipulate when a person can access the funds. If someone requests the money earlier than retirement age, they will have to pay taxes on their withdrawal.
Income Limitations
Another important factor when it comes to LIRPs vs. Roth IRAs is the amount of money you can contribute to your plan. Anyone with an IRA knows that there is a maximum contribution that you can make to your plan. Once that amount is reached, you cannot put more money into that retirement account.
With a LIRP, there’s no limit to the amount you can contribute. The value of your plan comes from the amount you pay over your policy-mandated minimum. So if you pay a little or a lot more, that value goes directly into your policy.
Finding What’s Best For You
The reality is, the best defense is a good offense. You never can tell what life will throw at you, so the best course of action is to be prepared. When planning for retirement, it’s best to diversify your options because each plan has its benefits and drawbacks. Often, these different plans complement each other well and can help you cover where you may be vulnerable.
Without guidance, it can be hard to plan ahead. There’s never a better strategy for retirement than consulting with experts, and Matador Insurance is ready to help you figure out where your contributions should be going.
A Roth IRA is a fantastic way to grow money. No one wants to lose all that cash to taxes, especially if you’re trying to do the right thing and save it. So having the ability to put away money and have it grow is one of the best ways to generate value.
Life Insurance Retirement Plans are a secure and flexible option for retirement. They have no age requirement, so you can actually access these funds before retirement. Another benefit is that they offer a stable growth rate that ensures your investment will never result in a negative term. Often LIRPs guarantee at least a 3% return.
Combining Retirement Strategies
By combining these two options for retirement, you can increase your overall success when it comes to retirement investments. A LIRP gives you access to funds earlier than a Roth IRA, so you can take out loans or withdraw cash from the life insurance plan at any time, especially to cover you if you’re waiting to pull out your Roth IRA or 401k until retirement age.
This doesn’t mean that a LIRP doesn’t have good benefits; often, LIRPs are praised for their growth related to the stock market. A LIRP is still an investment account, and the value you receive mirrors the stock market, just not as much as an IRA or 401k. The big benefit, however, is that you still get that stock market growth, but with none of the risk; your LIRP is guaranteed to never result in a negative.
For any of your retirement questions, Matador Insurance is here to help. Everyone has a different retirement situation, and there’s no catch-all retirement plan. Maybe you’ve got a 401k but can’t access your funds. Maybe you and your spouse have made retirement contributions, but you aren’t sure if you’re putting your money in the right places.
With a dedicated track record, Matador Insurance can help you take action and make a big impact in your retirement. Life isn’t waiting; the earlier you make your plans, the sooner you can begin enjoying what your future has in store. If you’re ready to get started on planning your retirement journey, contact Matador Insurance for retirement peace of mind.
