The idea behind today’s episode comes from a conversation David had with someone at a recent event he spoke at. He praised the LIRP as the “perfect Swiss Army knife-type of investment,” and couldn’t understand why more people didn’t make it their only investment tool.
David isn’t a fan of conversations that position the LIRP as a “Holy Grail” of financial planning.
David shares examples of questions and conversations of the arguments that may be made by someone who’s a big believer in the LIRP in these terms.
David discusses potential scenarios and conversations you may find yourself having.
The Power of Zero strategy calls for multiple streams of tax-free income, none of which show up on the IRS’ radar but all of which contribute to you being in the 0% tax bracket.
There are four streams of tax income: the Roth IRA, the Roth 401k, the Roth conversion, and the RMD that’s up to standard deduction limits out of your IRA.
David discusses how they’re being invested in, and how some licensed life insurance agents persuade people against investing in the stock market.
As David illustrates, there are some shortcomings in the approach similar to the event attendee he was chatting with, as the approach doesn’t appreciate the broader role that the stock market plays, in a balanced approach to tax-free retirement planning.
The LIRP, especially that in the form of a puppy and in the form of the IUL Index Universal, can generate up to 5-7% annual rate of return.
“The LIRP is not designed to be the primary source of retirement”, says David. “Savings are designed to be a supplemental source of retirement savings”.
David goes over the type of life insurance agents you want to stay away from, and why you may want to embrace a stock market-type approach to investing.
When it comes to the LIRP coming into play, the focus should be on an approach that involves both stock market and LIRP – as they both play an indispensable role in a comprehensive, and well-balanced, path to retirement planning.
Mentioned in this episode:
David’s books: Power of Zero, Look Before Your LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code
PowerOfZero.com (free video series)
@mcknightandco on Twitter
@davidcmcknight on Instagram