David McKnight discusses the three assets he believes you really need for a stable, predictable tax-efficient retirement.
Getting them right will dramatically reduce the risks that derail most retirements: Market risks, sequence of returns risks, longevity risks, tax risks, and long-term care risks.
Stock market investments, with a 70% total US stock market index and a 30% total international stock market index, are the first thing David recommends.
He defines them as "Your growth engine, the one that pays for your discretionary expenses in retirement."
David goes over aspirational and shock expenses.
A Fixed Index Annuity (or FIA) is the second asset you'll need in retirement.
A FIA is the one asset that eliminates the longevity risk, the risk of living so long that you deplete all your other assets.
Then there's Index Universal Life Policy (or IUL).
A recent Ernst & Young study found that retirement plans that included IULs, as well as FIAs, provided more income in retirement, a higher likelihood of money lasting through life expectancy, and more money to heirs over the investment-only approach to retirement."
Remember: If you withdraw money from your stock portfolio in a down market, you lock in losses and your portfolio has a much harder time recovering.
In other words, the IUL acts as your retirement shock absorber.
Did you know that, because of its safe and productive growth, the IUL can serve as what we call a "volatility buffer" in retirement?
And there's more! In fact, an IUL can also serve as a bond alternative during the accumulation years – but without the interest rate risk or bond price volatility.
David sees IULs as the most dynamic asset of them all – it's your volatility buffer, your bond alternative, and your long-term care safety net.
Mentioned in this episode:
David's new book, available now for pre-order: The Secret Order of Millionaires
David's national bestselling book: The Guru Gap: How America's Financial Gurus Are Leading You Astray, and How to Get Back on Track
Tax-Free Income for Life: A Step-by-Step Plan for a Secure Retirement by David McKnight
PowerOfZero.com (free video series)
@mcknightandco on Twitter
@davidcmcknight on Instagram
David McKnight on YouTube
Get David's Tax-free Tool Kit at taxfreetoolkit.com
