Make financial plan for children’s educational savings and your retirement income

Children's educational savings plan and your own supplementary retirement income plan are two big issues in the United States families. It’s not the issue of no option, but the options are too many which is better for them. The options are not a "either or another" relationship. From our point of view, it is absolutely the best choice to use all financial planning options and financial tools within our capabilities.

Is there a more concise, relatively efficient financial plan that can help us save for both our children's college education and their parents’ retirement income?

Let's take Eva as an example:

Eva, 35, her daughter had just passed her 2nd birthday earlier. Eva feels the responsibility as her parent. As the U.S. educational cost increasing over years, Eva wants to plan ahead for her daughter's college tuition, avoiding the cash-flow dilemma of having to come up with a large sum of money at once. In addition, Eva also wants to enjoy her retired life after her children graduated, so she also needs to prepare for a supplementary income for retirement. Eva's community financial adviser advised her to use a specific index insurance account design to help achieve her goal.

Analyzing

-Eva applied for an index issuance account, depositing a premium of $6,000 per year for 15 consecutive years.

-In the year of the child's 18 years of age, Eva stopped depositing premiums.

Meanwhile, Eva began withdrawing tax-free 3 funds from her policy account to pay for her daughter's four years of college tuition.

Four years later, my daughter graduated from college and Eva is 54. Eva continues to deposit $6,000 a year into this policy account and starts saving for her retirement.

-When Eva was 65, Eva stopped saving and started withdrawing $40,000 from her policy account.

-For the next 15 years, Eva will start withdrawing $40,000 tax-free from her policy account each year to supplement her retirement income.

- The remaining funds or death compensation in the policy will be paid to Eva's beneficiaries at the time of her death.

What are the advantages of doing so?

-Eva can provide $20,000 a year in tuition fees to the child from the policy account, which is completely tax-free3.

-The money withdrawn from the policy does not affect your child's application for an additional student loan.

-When Eva reaches 65, she can withdraw a tax-free pension of $40,000 from her policy account each year as a supplement to her income, with a cumulative withdrawal of 15 years, for a total of $600,000.

-Eva will have a financial guarantee if there is any accident with her child growing up.

In this case, Eva paid a total premium of $156,000. Potential withdrawals from the policy account - including pension expenses and children's education expenses - have accumulated $680,000 for themselves, leaving a sum of money for future generations after death.

FAQ

Q1: Saving $6000 a year is too little, can I save $60,000 a year, $600,000?

A1: Yes. When we have mastered the principle of using this type of use of a specific life insurance policy for wealth planning, the first reaction is to use the policy account to "hide as much" money as possible. But when the IRS doesn't collect taxes, it doesn't. This column from the American Life Insurance Guide describes the long history of the struggle between the policyholder, the insurance company and the IRS.

Read: How much money can I hide in my policy? 818 Why can I hide money in my U.S. policy account? This is actually a "palace fight" historical drama... )

Q2: How do I know how much i can save up to your policy account? How much can I get?

A2: The maximum amount of money that can be deposited in a policy account is determined mainly by factors such as age, gender, health status and coverage, and each policy account application is tailor-made. Different insurance companies' different products and market positioning, with different design options, will also affect our policy account applications.

Therefore, in this kind of comprehensive financial planning that takes into account the parents' "retirement income" and "children's education fee collection", you can first cooperate with professional insurance consultants to discuss the financial planning plan and policy account selection, understand how to save, how much, how many additional benefits, how much money at different time periods, and ultimately achieve the goal of life-long financial and guarantee 2-1 comprehensive planning.