At age 40, Stella was doing quite well. Her consulting business had brought on several lucrative clients, which allowed Stella and her two daughters to live quite comfortably. However, Stella had a goal of retiring at age 60 – and her current retirement savings had barely made up what was lost in 2008 when they took another hit in early 2020.
When Stella asked her financial advisor how she could still accomplish her passive income goals in the next 20 years, he showed her a LIRP. With the plan he proposed, Stella could contribute $60,000 annually between age 40 and 60 – an amount that was definitely within her budget.
When Stella reached age 60, her total contribution of $1,200,000 could net her more than $252,000 per year in tax-free income – which came to more than $7.8 million in total income distributions over the next 30 years.
Even better yet, Stella’s advisor showed her how the LIRP was also “self-completing,” meaning that if the unexpected occurred, her daughters would not have to struggle financially – and could easily maintain their current lifestyle, and attend the colleges of their choice, given the immediate death benefit coverage that started at $1.9 million and grew over time to more than $6.5 million, which could be inherited income tax-free by her children.