investments, social security and a fairly large IRA. Because they are in their 70's they were taking minimum
distributions but after looking at their numbers I could tell that they were passing up the opportunity of
taking larger "taxable" IRA distributions without paying any taxes.
I explained to them that while they are both still here and married they have an opportunity that will
disappear once one of them passes away. While married filing jointly they can take several thousands of
dollars more out of the IRA without paying any taxes. At first look I figured the amount would be somewhere
between $5,000 and $10,000 per year It took several calculations because for each dollar more that we
took out of the IRA it also caused more of the social security to become taxable. Notice here that I said
"taxable" not actually taxed. The real number came out to be $6,000.
So after showing the people how this would work, I asked them what their intentions were for that IRA
money and asked why they weren't taking the larger distributions. They told me that they were only taking
what the needed and hoped to pass on the majority of the IRA money to their kids. So then I asked them if
their intention was to have their kids inherit 2/3rds of the money and the government the other 1/3 or if they
would prefer more of that go to the kids. You can guess that answer, it's the same one you would have
So at this point in time they agreed with taking the extra distributions but were wondering where now to
invest that money so that it was safe, available in case it was needed and wouldn't cause a new tax
problem. The solution was to put the money in a single premium Life Insurance policy. The $6,000 buys a
little over $8,000 of benefit and both the cash value and the death benefit will increase over the years.
With the particular product suggested they will always have access to the full $6,000 plus earnings.
So the end result was for every year we get to take out the extra $6,000 tax free we are returning to the
family someday at least $1,500 that would have gone to the government. All in all not a bad return on a
out by my asking this couple if we could compare our life insurance rates with what they were paying for life
insurance through their employers. I didn't really think we could do it because for decades we have never
been able to touch those rates. However we have noticed that group rates seem to have been going up
lately. Sure enough we were able to beat the group rates and substantially. We beat those group rates by
over 40%. Also, in both cases we are talking large employers one of them being an agency of the federal
The lady in this case is mid 50's and has a good paying job with the government. She told me that she had
already been looking at retirement options and wasn't too happy with the amount of monthly income she
would have to give up to make sure that her husband would still get a pension if she was to pass away
We've worked this kind of case several times before and so I proceeded to show the option(s) and why they
make sense. I am going to use fake numbers here so as not to give away enough details to where
someone could figure out whom we might be talking about.
Let's say the women could get $3,000 per month if the pension is only figured on her lifetime but would only
get $2,500 per month if she wanted to make sure that her husband would get at least $2,000 per month
after her passing. I showed her how if she just spent about $300 per month on the life insurance she was
already buying she would be able to provide enough of a death benefit that it would produce at least
$2,000 a month for her husband. That's what he would get if she passed away when he is 65, the longer
she lives the bigger the monthly income would be for him.
Now the really great part about this solution. If she gave up the $500 per month and he passed away first
neither she nor any other member of the family could ever recoup that money. Since women outlive men to
start with and she is younger than he is, the chances are that she will outlive him. Whereas with our
solution she and her family get the following benefits:
1. She automatically gets a net take home of $200 more per month.
2. If the husband passes away first, she will have the option of stopping the insurance or decreasing it and
keeping it so that at least someday someone (the kids) will recoup all that money. If she were to drop the
insurance she would get the other $300 per month for the rest of her life.
We just love showing people how to get to keep more of their money!
|CASE STUDY 1 TAX FREE IRA MONEY
|CASE STUDY 2 PENSION MAXIMIZATION
It is our job to educate our
client on the product or
service that they are
interested in so that they
can make a wise,
|CASE STUDY 4
COUPLE PAYS OVER $1,500
TOO MUCH IN TAXES FOR
|All the information and
education in the world is
useless until connected
to an action