A tax-free retirement means there is no income tax due on the retirement income and can be achieved in Three ways:


  1. A Roth Account; Provides for tax-free withdrawals but this type of retirement account has, "Contribution Limits". These limits may not allow an individual to contribute enough for a comfortable retirement and if their income is over a certain limit, they will not be able to contribute at all.
  2. Tax Free Municipal Bonds or Bond Funds; These tax-free bonds or tax free bond funds provide a tax-free income but the low return and the fact that the income is countable in the formula to determine if, or how much, of your Social Security income will be taxed and that could be deterrent for some people.
  3. Indexed Life insurance policy; To achieve enough tax-free income to provide a comfortable retirement this the best option. Just like automotive equipment, automobiles, homes, and most any other tangible or intangible possession we own, life policies are not created equal.

Tax-free income from a life policy is available by setting up a series of loans once retirement age is reached. One should stop paying the premiums at that point also. Loan proceeds are not taxable and the loans, once started, are direct deposited into a checking account every month, or can be done on an annual basis. The gross annual income will be slightly more if done on a monthly basis. I recommend a policy with Minnesota Life and/or Allianz Life that is specifically designed to take advantage of the tax-free income concept. There cannot be a negative return. A zero is the worst that can happen. Indexed loans will produce the most tax-free income most of the time. The indexed loan option has a guaranteed maximum interest rate of 5% or 5.5%, depending on which company we use, and the cash accumulation account is still earning whatever returns the index rate is receiving. For example, if the index rate is 7% the accumulation account would be credited at 7% and the interest on the outstanding loan would be charged at a maximum of 5% or 5.5%. If the index account earns 10% the policy would receive the 10% gain and the outstanding loan would be charged 5% or 5.5% depending on which policy you have. And if the insured dies the beneficiary will receive the net death benefit after the loan is paid back. One note of caution, this policy must stay in-force, meaning it cannot lapse, before the insured dies. If that happens then everything that has been loaned out will be taxable income less the premiums paid. The policy has a special provision designed to prevent that from happening.

For more information call (903)791-0523 or e-mail me @ waren944@cableone.net