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How can whole life's tax advantages benefit you in retirement?

How can whole life's tax advantages benefit you in retirement?

March 08, 2023
Feel more confident in retirement with whole life as a part of your strategy

Will your main retirement income be from taxable sources such as Social Security and a 401(k)? Are you looking for tax efficiencies and diversification in retirement? Let’s explore how whole life can not only provide you with death benefit protection, but also a number of tax advantages that may be surprisingly helpful to you in retirement. 

  1. Tax-deferred growth
    Similar to the growth portion in your retirement accounts, the cash value¹ growth in a whole life policy is tax-deferred and you typically don’t have to pay taxes on it.

  2. A tax-efficient source of supplemental retirement income
    A matured whole life policy with years of premiums funded and cash value growth can provide you with access to funds to supplement income in retirement through policy withdrawals up to the total premiums paid without incurring taxes.²,³

    A whole life policy is also insulated from market volatility. In tumultuous times, it may help to preserve the value of your market-sensitive retirement accounts as an alternative income source.

Planning ahead for your retirement is important. Connect with me to discuss how a whole life policy may be a source to help supplement your retirement. 

¹ Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.

² Some whole life polices do not have cash values in the first two years of the policy and don’t pay a dividend until the policy’s third year. Talk to your financial representative and refer to your individual whole life policy illustration for more information.

³ Policy benefits are reduced by any outstanding loan or loan interest and/or withdrawals. Dividends, if any, are affected by policy loans and loan interest. Withdrawals above the cost basis may result in taxable ordinary income. If the policy lapses, or is surrendered, any outstanding loans considered gain in the policy may be subject to ordinary income taxes. If the policy is a Modified Endowment Contract (MEC), loans are treated like withdrawals, but as gain first, subject to ordinary income taxes. If the policy owner is under 59 ½, any taxable withdrawal may also be subject to a 10% federal tax penalty.

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