Entrepreneurs are risk takers by nature; most swing for the fences in their chosen enterprises. Most fail once or twice before succeeding. Many businesses fail even AFTER having succeeded.
Retirement savings need to be approached differently.
- The retirement nest egg should be fed starting as early as possible and should be focused on steady growth with downside protection.
- If started early enough and insulated from losses, even 10k per year can compound into a significant portfolio over time.
- Not sufficiently appreciated, life insurance is an ideal retirement tool for entrepreneurs under 50. Even older under certain circumstances.
- Investment-oriented life insurance compounds with doubled-up vigor by benefitting from the tax-avoidance features it offers; all internal growth is tax-deferred.
- In addition, life insurance offers tax-free access to gains in the form of policy loans, usually of the “wash” variety. This turns a life policy into an unlimited Roth IRA.
- The Fixed Index Universal Life (FIUL) policy offers the greatest growth potential; some varieties offer extraordinary loan features.
- Based on today’s tax regime, nothing beats the retirement funding potential of this financial instrument; what’s more, being tax-free on the payout side takes the recipient off the grid. The cash flow from this source is non-reportable.
- The instrument also serves the traditional family protection needs met by life insurance.
- It can also serve business needs: funding deferred compensation arrangements; buy-sell agreements with partners and co-shareholders; and key-person coverage to protect the on-going viability and on-going-concern value of an enterprise.
- Thus, retirement planning should be built into the wide array of planning needs unique to entrepreneurial endeavor.
Ask us for examples and stories from 30 years’ experience working with small business owners available.