.png)
EARNING A HIGH INCOME REQUIRES A DIFFERENT RETIREMENT STRATEGY
Why traditional investments may only be one piece of your retirement plan.
I've been in financial services for nearly 20 years and I've worked mainly with people who earn over $170,000. Many of them share the same mindset. They say things like "I'm
comfortable, Life is good, I have no complaints, I (we) have plenty of cash flow".
But what they never calculate is the gap between their current trajectory and the capital they will need to maintain their lifestyle but WITHOUT working.
If a person wants $2,000 a month in passive income, modest by any affluent lifestyle standard, and they're relying on a conservative cash equivalent yield in the range of 2%, the capital they will need is $1.2M.
That number sits in almost every clients blind spot. They have a vague sense that they need "enough" but they have no idea what enough means in dollars. They've never run the math because nobody's ever sat down and forced them to.
Research from EY Ernst & Young provides an important perspective for higher-income professionals and business owners who have traditionally relied heavily on investment-based retirement strategies.
In its research, “How Life Insurers Can Provide Differentiated Retirement Benefits,” EY examined how incorporating permanent life insurance and deferred income annuities alongside traditional investments could affect retirement outcomes.
Using thousands of simulated economic scenarios, EY found that integrating insurance products into a broader retirement strategy could potentially improve outcomes depending on an individual's goals.
3 RISKS HIGH-INCOME EARNERS SHOULDN’T IGNORE
1. TAX RISKTraditional 401(k)s and IRAs can provide valuable tax deductions today, but pretax contributions and earnings are generally taxable when withdrawn. A large retirement balance doesn’t necessarily equal the same amount of spendable retirement income.
2. MARKET & SEQUENCE-OF-RETURNS RISKMarket volatility becomes particularly important when you begin withdrawing money. Significant losses early in retirement combined with ongoing withdrawals can put additional pressure on how long an investment portfolio lasts.
3. LONGEVITY RISKOne of retirement’s biggest unknowns is simple: How long will you need your money to last? Annuities can provide guaranteed lifetime income, helping transfer a portion of that longevity risk to an insurance company.
WHAT DID THE EY RESEARCH FIND?
EY's analysis found that retirement strategies combining investments + permanent life insurance + deferred income annuities can potentially produce better retirement outcomes than investment-only approaches in certain scenarios.
Permanent life insurance may provide tax-deferred cash-value accumulation, a death benefit and tax-advantaged access to cash value when properly structured and managed.
The goal is build different buckets of money.
Investment Bucket → Long-term growth potential
Tax-Advantaged Bucket → Greater tax diversification
Guaranteed-Income Bucket → Predictable lifetime income
I work specifically with higher-income W-2 professionals and business owners who want to understand strategies beyond simply putting more money into traditional tax-deferred retirement accounts.
If you're earning six figures and wondering whether you're truly maximizing your income today while preparing for retirement tomorrow, let's run the numbers.
BOOK YOUR PRIVATE TAX-FREE WEALTH STRATEGY SESSION
Carmen HornbergerCEO |
Benefits To Go LLC
Tax-Free Wealth Consultant
📞 314-393-4037
Source: EY, “How Life Insurers Can Provide Differentiated Retirement Benefits.” Insurance and annuity products involve costs, limitations and eligibility requirements. Policy loans and withdrawals can reduce cash value and death benefits and may create tax consequences if a policy lapses or is surrendered. Guarantees are subject to the claims-paying ability of the issuing insurer. This material is for educational purposes and is not individualized tax, legal or investment advice.
Comments