For the millions of Americans who are working and sacrificing to ensure that their families maintain a comfortable lifestyle, even when the primary breadwinners have retired, choosing the right retirement savings plan is vital. A lot of these folks save for retirement using a 401(k) plan, choosing the safe, well-trod route that countless Americans have used to put away money – often with a tidy contribution from their employer as well – for their later-in-life needs.

While 401(k) plans are the preferred option for many, they may not always be the best way to prepare for retirement. Believe it or not, life insurance policies, when used to take advantage maximizing the cash accumulation that are part of many policies, may be the superior retirement choice. Unlike 401(k) plans, where the owner must often pay taxes on his or her retirement savings when the time comes to tap the plan for funds, the money you save though your life insurance policy may be used in retirement as tax free income…..if you understand and follow the rules.

When most people think about life insurance, they think about the death benefit it will pay their families should they die unexpectedly. What many people don’t realize is that their life insurance policy can also offer little know benefits they can take advantage of. Many universal and whole life policies have an option that allows you to additional premiums for retirement. When it’s time for you to retire, you may have access to that money without paying taxes on the earnings the policy has gained. Holders of 401(k) and IRA plans must pay taxes on the earnings their investments have obtained. The down side is you cannot tax deduct your life insurance premiums but that short term benefit may be far outweighed at retirement. In simple terms, paying your tax on the deposits, not on the earnings can often have huge benefits in retirement.

The tax-advantaged status of life insurance retirement savings options make them a superior choice for many Americans over other retirement savings options.

When considering how much you need to retire comfortably, the number $2 million is often repeated by investment advisors. This is a brash assumption. I have 300+ retired clients and 1 of them has that much money. Depending on your lifestyle and plans for how you intend to spend your retirement, you could need more or less. Regardless of what your number is, minimizing your tax liability is important to being able to access as much of your retirement savings as possible. Good point.

If you’re looking to travel after you’ve retired, or if your children will have ongoing educational needs, Not a real issue about educational needs keeping as much of your retirement savings out of the government’s hands is key to being able to meet your obligations while also getting to enjoy your retirement years.

Hard-working professional Americans are taxed enough, and we all know it. According to recent reports, only about 53 percent of Americans pay taxes. If you’re among the responsible, industrious class of citizens who have been blessed with the opportunity to earn a good living and fulfill your civic responsibilities as a contributor to society, by the time you retire, you’ve done your part. Why give the government more? By choosing a tax-advantaged life insurance savings option, you can minimize your exposure to taxes and let your money work for you in retirement.