401(K) vs. IRA vs. IUL
Plan, Protect, Prosper
Your golden years should be as stress-free as possible and filled with a wide range of exciting possibilities. Thoughtful and strategic retirement planning helps you build a secure financial foundation, empowering you to embrace and enjoy the life you truly want to live during your retirement years.
When planning for retirement or considering your future financial goals and aspirations, understanding how different investment vehicles can work for you is key. The choice of where to place your money can make a huge difference in your long-term financial security.
Let’s take a closer look as an example at what $1 million dollars can provide across three popular retirement options:
401(K)
Roth IRA
Indexed Universal Life (IUL) insurance policy
$1 Million in a 401(K): $40,000 per Year
A 401(k) is a retirement savings plan offered by employers.
Annual Income: $40,000 per year (TAXABLE INCOME)
The Breakdown: A 401(k) can provide you with steady income in retirement, but you'll be taxed on your withdrawals. A million dollars in your 401(k) will yield about $40,000 annually, but keep in mind, taxes and market fluctuations can affect your returns.
$1 Million in a Roth IRA: $55,000 per Year
This is a more favorable option than the 401k since the withdrawals are tax-free, meaning you keep more of your money.
Annual Income: $55,000 per year (TAX-FREE)
The Breakdown: The Roth IRA offers a significant advantage when it comes to tax-free withdrawals. With $1 million in a Roth IRA, you can expect to earn about $55,000 annually, tax-free. Tax-free with contribution limits. This means no surprise tax bills—what you withdraw is yours to keep.
$1 Million in an Indexed Universal Life (IUL): $75,000 per Year
An Indexed Universal Life (IUL) insurance policy provides a unique way to generate retirement income. It combines life insurance with an investment component that is tied to stock market indexes, offering growth potential without the downside risk.
Annual Income: $75,000 per year (TAX-FREE)
The Breakdown: An IUL is a powerful tool for both life insurance and investment. With a $1 million IUL policy, you can expect an annual payout of $75,000, and the best part? It’s tax-free! This is an excellent option if you want to combine wealth-building with a legacy plan for your family.
As we can see, Let’s take a closer look as an example at what $1 million dollars can have a significant impact on the income you receive annually in your retirement years.
Here’s a quick side by side comparison
401(k)
$ 40,000 Annually (Taxable Income)
Roth IRA
$ 55,000 Annually (Tax-Free Income)
Indexed Universal Life (IUL)
$ 75,000 Annually (Tax-Free Income)
Each investment option has its own set of advantages and disadvantages, but when you compare them side by side, it’s clear that the IUL provides the most attractive tax-free returns. Whether you're looking for income to enjoy your retirement or to leave behind a legacy, it's essential to understand how your money will work for you.
PLAN TODAY PROTECT TOMMORROW
Retirement planning is vital. It protects, builds confidence, and offers peace of mind. Good planning protects your family, supports retirement goals and aspirations, and ensures a lasting legacy.