Where Your Money is Parked Is Much More Important than the Rate of Return that You Earn
Why Dave Ramsey is DEAD WRONG about life insurance...
True wealth isn't just about "chasing rates of return" - it's about understanding the entire picture: the efficiency of the distribution mechanism, how the distributions are treated by the tax code, and how the distributions affect taxation on government retirement benefits (such as Social Security & Medicare).
You'll see that in this case, the Capital Equivalent Value of this client's life insurance contract equals $537,000 and a 15% Rate of Return.
What that means is over the next 10 years, any new money going into his 401(k) would need to average a 15% true rate of return to equal the after-tax income provided by this cash flow insurance contract.
Possible? Maybe*
Probable? I don't think so
Predictable? Not even close
If tax rates increase in the future, the 401(k) would need to perform at an even higher rate of return!
This is why more & more financially savvy Americans are deciding to move the foundation of their retirement income plan into cash value life insurance!
*The annualized true rate of return in S & P 500 during the last 10 years of this record bull market is 11.5% at the time of this writing, 03/20/2021. It is 13.5% if all dividends were reinvested.
P.S. If you haven't checked it out yet, please stop by my mini online seminar How Retirees and Pre-Retirees Can Potentially Avoid Going Broke While Keeping Their Nest-Egg Secure! Tons of great information and bonus is it is 100% COMPLIMENTARY!