Retirement Income Strategies

Saving for retirement can be nerve wracking, even if you follow all of the advice and do everything right. Market changes may enable you to make money from investments, but you can just as quickly lose money. Implementing effective retirement income strategies allow you to avoid the unknowns and provide financial security in retirement.


Bank on Yourself

Dividend-paying whole life insurance can play an important role in an effective retirement income strategy. This type of policy goes by several names, including Bank on Yourself, 501(k) Plan, the 702(j) plan, the 770 bank account, become your own banker, income for life, invisible bank account or the President’s Account. This dividend-paying investment plan can make for a reliable addition to your overall retirement income strategies.

Types of Life Insurance

Life insurance is generally available in two forms: whole life and term. Whole life insurance is guaranteed to remain in place for the insured’s whole life and pay a death benefit. Term life insurance covers specified periods of time. However, the death benefit is only paid if the insured passes away during the term. Regardless of the type of life insurance policy opened, premiums and fees must be paid in full and on time in order to collect the benefit(s).

Perks of Whole Life Insurance

Whole life insurance policies typically have higher premiums, but they tend to provide greater benefits. Many policies feature an investment option that will pay a cash value in addition to the death benefit.

Understanding Dividends

The dividends paid out by insurance companies to policyholders are part of the insurer’s profits. Dividend payment schedules vary from quarterly or annually and are established by individual companies. Furthermore, each company calculates dividends different, but it typically corresponds to the amount of money paid into the policy. The way policyholders use their dividends can impact how future dividends are calculated. Some whole life insurance policies feature guaranteed dividends, while others provide non-guaranteed dividends. A policy offering guaranteed dividends will likely have higher premiums. However, guaranteed dividends can be a dependable source of retirement income.

How to Use Your Dividends

Policyholders have several choices when it comes to how they use their dividends. Dividends can be taken as cash, or left to accumulate interest. A policyholder can use their dividends to pay the premiums or purchase additional insurance coverage.

Taking Control of Your Income

Each policy is different, so it’s important to shop around and find a policy that fits your needs. Retirement income strategies can vary from one individual to another, but a dividend-paying whole life insurance policy can be part of a well-structured and effective plan.