Income planning is one of the best decisions you can make for yourself, your family, and your retirement plan. Many financial tools can help you save money such as an Indexed Universal Life Insurance Policy, Indexed Annuities, or Term Life policies just to name a few. One of the most common methods people use for income planning is IRAs.
Known as an individual retirement account you can choose between a traditional IRA or a Roth IRA to help you meet your financial goals. If you are unsure about what financial tools are best for you this article can help.
We will share everything you need to know about Roth conversions and investment options that are no risk, tax-free, and that can keep your money safe.
What Is the Benefit of Roth Conversions?
If you have a traditional IRA there are a few benefits to converting it into a Roth IRA. One of those benefits is tax deferment. With a traditional IRA when you withdraw money, you have to pay taxes on that money.
This includes any contributions that you made as well. Yet, with a Roth IRA as long as you meet the conditions of this financial tool your withdrawals are tax-free.
Another benefit of Roth conversions is no RMDs or required minimum distribution. When you have reached the required minimum distribution age, for a traditional IRA, you are forced to take distributions each year. No matter if you need the money or not.
The problem with this is you are losing the opportunity to continue to grow your money tax-free because you are required to withdraw funds. Since Roth IRAs don’t have required distributions your money can continue to grow tax-free.
Other Income Planning Tools
Roth conversions are beneficial. Yet, they can be more beneficial when used with other income planning tools. Tools such as indexed annuities, indexed universal life policies, and term life policies can help you grow your money even more.
How Can Indexed Annuities Benefit Retirement Income?
Indexed annuities can provide guaranteed income providing you with long-term income. When you use a fixed index annuity you can choose the accumulation or withdrawal period begins. This can be a lump-sum or fixed payment which can help you make better financial plans for retirement.
Indexed Universal Life and Term Life Policies Are Valuable for Income Planning
An indexed universal life is a life insurance policy that has both living and death benefits. The premiums you pay help build cash value overtimes which can be used for loans or a lump sum withdrawal in retirement.
A term life policy provides death benefits for a term say 10 to 30 years and once the term ends so does the coverage. However, some term life policies do have a return of premium option. These are great FEGLI alternatives because you don’t have to be a federal government employee to use them.
Income Planning Doesn’t Have to Be Difficult
No matter if you use a Roth conversion, Indexed Annuities, Indexed Universal Life, or Term life insurance all of these tools can help make a difference in your income planning.
If you are looking to learn more about your investment options or you need help with income planning, our trusted advisors can help you get started by contacting us today!