One Simple Step That Lowers Your Retirement Fund Fees

The Problem with Retirement Planning: Fees, Fees, and More Fees

If you have started working with some wealth managers or retirement planners, then you may be overwhelmed with how many fees are hidden in certain retirement strategies. Over time, these fees can take a significant bite from your retirement portfolio. That’s why it is important to seek out ways to lower your fees as your wealth grows into retirement. That’s where a Life Insurance Retirement Plan or LIRP comes in.

What is a LIRP?

A LIRP is a life insurance policy that allows you to withdraw from its cash component. This allows you to have a fixed stream of income during retirement. One big advantage of LIRPs is that there is no contribution limit. That allows you to grow more of your retirement money tax fee until you can begin to make withdrawals at age 59 ½ However, one of the biggest appeals of LIRPs is their ability to save you in fees over the long term.

The Misconception About LIRPs: They’re Expensive! (Not Really)

There are lots of personal finance gurus who bemoan the concept of LIRPs as being too expensive. This may be the case for smaller investors. However, if you are a high net worth individual, with a long-term horizon, LIRPs is actually one of the most affordable ways to grow your money tax-free.

How Do LIRPs Lower Your Retirement Fees?

Let’s compare how LIRPs perform against other retirement planning alternatives such as 401K plans. Managed 401K plans have a fee of about 1-2% every year. Now, LIRPs tend to have fees that are higher than 1-2% in the early years. However, these fees tend to go down over time. In fact, you will end up likely paying significantly less than 1-2% in annual fees as your LIRP account grows. Remember, you can put an unlimited amount of money into a LIRP. This allows you to enjoy some significant fee savings that can have a material impact on your bottom line.

Adding LIPRs to Your Overall Retirement Strategy

Be sure to consider fees when looking at the available options for your retirement planning. If you want to learn more about LIRPs, talk to a wealth manager about how this powerful policy can potentially save you more in fees than other retirement alternatives.

When it comes to wealth planning, you not only have to think about growing your accounts, you also have to consider how to protect yourself from losses. With tax-loss harvesting, you can take a loss without actually losing all of your money in that trade. Best of all, you can take a similar trade to take advantage of any recovery. Be sure to talk to a wealth manager about how to best utilize tax-loss harvesting today.