If you’re planning on retiring any time, ever, then the sooner you start planning for it the better off you’ll be. Most things are that way. The better you plan, the better the outcome usually is. You’ll need to narrow down the best retirement income plans now.
That’s why I was shocked when I first started out helping people plan their retirements. I worked with the senior market. People mostly planning on retiring within 5 years. I was stunned by how many people I spoke with that were just starting to plan their retirements!
That realization was one of the inspirations for starting this blog. I became passionate about introducing people to good retirement plans sooner rather than later.
The best plan will depend on who you are, what you need, and your financial situation. It can be overwhelming trying to narrow down the best plans, so here is a consolidated list of some of the best retirement income plans.
1. The Right Life Insurance Policies With Living Benefits (if you start young)
This answer often surprises people. When most people think of life insurance they think of a policy that just covers your loved ones after you die. Or a way of boosting an inheritance. While those things are important, it’s FAR from the only use for life insurance.
Life insurance can be an incredibly lucrative and tax sheltered retirement investment!
After getting licensed with over 21 life insurance companies, I found that the best was an Indexed Universal Life policy, with a company called National Life Group.
This is basically how it works. Picture a pair of jeans. In one pocket is The Premium, and in the other pocket is The Cash Value. The premium is what gives you a death benefit (the money that your people get if you die), the cash value is money in the life insurance policy that you can actually access while you’re alive.
Your life insurance agent can customize this according to your need. If your goal is mainly a retirement investment, most of the money you contribute to it can go into the cash value pocket (say for example you contribute $100 a month; $85 to the cash value, $15 to the premium).
So why would you want to put up with some of your savings going to a premium? Two reasons:
1. National Life Group invests the cash value to give you an interest rate as high as 12.5%!
2. The premium means it’s technically a “life policy”, not a “retirement fund”. This means that 100% of the cash value you withdraw is 100% non-taxable. You get it all.
Start small, and work your way up!
Think about it. Most savings accounts make less than 1% in interest. The best savings account available makes 1.6%. The best CD’s are making less than 3% interest. Even many 401K and IRA plans don’t compare! While National Life Group’s plans will vary between 3% and 13%, they’ve been averaging 9% and up for years… and with no risk of loss.
On the tax end of things, think about it this way. Say you retire, and you’re getting $25,000 per year from social security and/or a pension, and you withdraw another $50,000 per year from a standard retirement investment (like an IRA or 401K), for a total of $75,000 a year. Not only is the $25,000 taxable, AND the $50,000 is taxable, but your income bracket will be based on $75,000, thus higher taxes. If you were drawing that $50,000 from a life insurance policy, not only is the $50,000 completely tax free, but it won’t be added to your tax bracket. Thus you are only paying taxes on $25,000 per year, while living on $75,000.
That’s a good deal.
On top of this, you will have a massive chunk of money to protect your family if you die, and you are also able to take the death benefit to pay for nursing home care in a worst case scenario.
The older you are when you get your life insurance policy, the more money has to go to the premium, instead of the cash value (your retirement money) so it’s better to start young.
Skeptical? I don’t blame you. There’s been a lot of negativity around annuities lately.
The issue is that because an annuity sale pays so much to an agent, many agents are tempted to sell things in their own best interest, instead of the clients. Make sure you have an agent you can trust.
An annuity requires a chunk of money, like a nest egg, to put into the investment, and then let it sit. Generally, they need to sit for at least 10 years, and the longer the sit the bigger they grow.
The reason annuities can be really good for income is because they are safe, and because they will usually come with what’s called a guaranteed income rider.
A guaranteed income rider will give you a guaranteed payout for life, no matter how long you live.
The 3 best fixed indexed annuities are:
-The Ascent 10 Bonus 2.0 from Athene
-The Rate Shield 10+ from American Equity
-The Allianz 222 plan from Allianz Life
Example: a $200,000 investment, sitting for 10 years before activation, should add approximately $20,000 per year to your income. In a bank, the $200,000 would be used up in 10 years at that rate. With the annuity, you could live for 40 more years and still be paid the $20,000 every year, guaranteed.
3. Residual Income
Passive, residual income is the best way to retire early. If you’re not familiar with the term residual income, this is basically how it works: you do a large and consistent amount of work for a period of time, with low initial pay off, but which will eventually pay you for life on auto-pilot in the long-term. Over time it will build up more and more, until you are passively making a full time income, without doing any work.
There are many ways to create a second income flow that gives you long-term residuals.
If you have a fair bit of interpersonal skills, or sales experience, selling insurance or real estate can work out very well. But if you don’t, here is one of the best and most effective ways to create residual income for life.
Believe it or not, you can blog for income. If you want to know more about how it works check out this article. Using a program called Wealthy Affiliate, I learned how to create an online business recommending good products to readers. Every post you write has the potential to make money, the more you write the higher your income opportunity is, and each post can pay you for decades.
The longer and more consistently you blog, you will start to grow an audience that is interested in the topic you’re writing about. You can partner with companies to promote their products, and can then make an unlimited income when people buy products based on your recommendations.
Once your posts are ranking high up in Google, they can stay there for years and years, and you can continue making a sizable flow of income off of every one of them!
There is no reason to stay in a 9-5 grind, or to wait for decades before you can be the master of your own time again.
Worrying about retirement, or feeling unable to pursue the things you’re more passionate about, can be changed.
It’s just about finding the right tools, learning the right things, and taking action.
If you have questions about any of these things feel free to ask in the comments below!