Retire Wisely: Use a Buffer Asset to Maximize Income and Legacy

How to Generate Tax-Free Income In Retirement With Zero Market Risk

If you’re planning for retirement and are concerned about market volatility, taxes, or outliving your savings, you’re not alone. These concerns are real and valid, especially as traditional pensions disappear and Social Security becomes less reliable. But there is a solution that combines tax-advantaged growth, tax-free income, and a built-in legacy for your loved ones.

By leveraging two powerful provisions in the IRS tax code Section 101 and Section 7702, you can build a strategy that not only gives you tax-free income in retirement but also protects your investments and provides a tax-free death benefit to your heirs.

This type of planning tool is often built using a properly designed whole life insurance contract. But this is not just about life insurance. This is about maximizing your overall portfolio by introducing a buffer asset and tax-free income to your retirement plan.

Watch This Short Video to Learn More

If you're looking for a way to enjoy a tax-free retirement without risking your money in the market, this video explains how the right strategy can help you save, grow, and protect your money using the tax code.

Click the image to watch the video

How the Strategy Works

When structured properly, permanent life insurance can be used as a tax-advantaged savings vehicle. Here's what it allows you to do:

• Grow your money tax-deferred

• Access income tax-free through policy loans

• Avoid market risk entirely

• Earn yearly non-taxable dividends

• Leave a tax-free death benefit to your beneficiaries

It’s one of the few tools in financial planning that offers both living benefits and legacy benefits in one solution.

Why a Buffer Asset Matters in Retirement

One of the most overlooked threats to retirement income is the need to sell investments during a down market. When that happens, you lock in losses, and your portfolio has less capital to rebound. Over time, this dramatically increases the risk of running out of money.

With this strategy, your life insurance policy acts as a buffer asset. A non-correlated account you can draw from during negative market years. Instead of selling stocks or depleting your 401(k), you tap into the life insurance cash value, giving your investments time to recover, and allowing your retirement income to never skip a beat.

This simple shift can help:

• Maintain consistent income, even in bad markets

• Preserve your retirement accounts for future growth

• Extend the life of your portfolio significantly

• Enhance the legacy you leave behind

The Hidden Gem: The Tax-Free Death Benefit

While the cash value and income features are powerful, one of the most underappreciated parts of this strategy is the tax-free death benefit.

When you pass away, the death benefit is paid to your beneficiaries income tax-free under Section 101(a) of the tax code. This can serve multiple purposes in your overall retirement and legacy plan:

• Offset taxes owed by heirs on inherited 401(k)s, IRAs, and other taxable assets

• Provide liquidity to pay estate or income taxes without having to sell investments

• Enable you to spend more freely in retirement, knowing your legacy is already covered

• Leave behind a guaranteed, tax-free legacy, no matter what happens in the market

In other words, you can confidently use your retirement savings to enjoy life without worrying about leaving nothing behind, because the money your family inherits comes from the life insurance, not your spent-down assets.

Who Is This Right For?

This strategy may be a great fit if you:

• Are between the ages of 30 and 65

• Want to reduce overall taxes on retirement income

• Are concerned about market volatility and sequence of returns risk

• Want to leave a meaningful, tax-efficient legacy

• Prefer predictable, flexible income sources in retirement

• Want to maximize your retirement income plan

Next Steps

If you're interested in building a tax-free retirement income plan that includes downside protection and a guaranteed legacy, this strategy deserves a closer look.

Schedule a complimentary retirement income strategy session to see how a buffer asset and tax-free death benefit can work together in your plan.