Tax Diversify to Protect Your

Retirement Income

Ardal Powell, MA, PhD

SMRU 1825871 (exp 9/1/2020)

Introducing

Ardal Powell, MA, PhD

Agent, New York Life Insurance Company
Registered Representative, NYLIFE Securities LLC
460 Temple Hill Rd
New Windsor, NY 12553
(845) 202-9722
[email protected]
www.ardalpowell.com

Registered Representative offering securities through NYLIFE Securities LLC,

Member FINRA/SIPC, A Licensed Insurance Agency and New York Life Company
460 Temple Hill Rd, New Windsor, NY 12553
(845) 202-9722
Welcome
This insurance sales presentation includes a discussion of one or
more tax-related topics. This tax-related discussion was
prepared to assist in the promotion or marketing of the
transactions or matters addressed in this material. It is not
intended (and cannot be used by any taxpayer) for the purpose
of avoiding any IRS penalties that may be imposed upon the
taxpayer.
Taxpayers should always seek and rely on the advice of their own
independent tax professionals. Please understand that New York
Life Insurance Company, its affiliates and subsidiaries, and
agents and employees of any thereof, may not provide legal or
tax advice to you.

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Agenda
• How much of the money that you have
saved for retirement will produce
income for you to live on?
• How much may go to other purposes
during your later years?
• What can you do to make the most of
your savings?

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Make good choices
• What decisions can we make to best
preserve our savings from sacrifice to
• taxes
• brokerage fees
• market volatility
• withdrawal rate
• inflation
• unforeseen care expenses?

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Tips and Takeaways
• How to calculate how much a dollar of tax-
deferred savings is actually worth
• How to read average rates of return and
understand the real growth
• How to find the taxable equivalent of a tax-
exempt savings vehicle
• How to protect market investments from
volatility when you need them for income
• How this knowledge can help protect your
savings and make them last longer.

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Which is better for you?
• Where are your savings now?
• Whose idea was it to put them there?

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Tax qualified accounts (IRA, 401(k))
• A deferral, not a deduction
• The IRS applies the rate in force at the
time. Congress can raise the rates any
time it has the votes to change the law.
• Limited contributions
• Penalty to withdraw before age 59 1/2
• Required Minimum Distributions, and
tax liability, after age 70 1/2

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Tax on tax
• You pay tax on the money you withdraw
to pay taxes with, compounding your
effective tax rate
• Effective rate is: marginal rate / (1-
marginal rate)
• Example: $100,000 @ 25% marginal:
0.25/(1-0.25)=0.3333333
Tax on $100,000 is $33,333.33
You need to withdraw $133,333.33

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Why is this allowed?
• Generates funds to fuel national
economy, via
• Industry (Investment banking)
• Government activity (Taxes)
• It is a really efficient mechanism for
this purpose.
• For people to save money for the
future, it is not optimal.

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Implications of leaks
• Higher withdrawal rate means money
runs out sooner
• Reducing withdrawal rate impacts
quality of life

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Brokerage fees
• Sales charges
• 12b-1 fees
• % of Assets Under Management

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Tax-deferred bucket leaks
• Taxes
• Brokerage fees

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What about that bucket with no leaks?
• Consistent and compounding interest
and the potential for dividends
• Tax-deferred growth
• Tax-free distributions

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What if it was a self-completing
solution like permanent life
insurance?
• Death Benefit: provides protection for
your family if you die
• Disability Waiver of Premium: pays
for itself if you become disabled
Permanent life insurance covers your whole life: as long as premiums are paid the
policy provides you with a death benefit and cash value accumulation.

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How would you compare?
• Valid basis for comparison:
– Spendable dollars ✔
– Risk vs. guarantees ✔
– Death/disability benefit ✔
– Leverage other assets/income ✔
• Not a valid basis for comparison:
– Account value ✖
– Rate of return ✖

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Taxable equivalent
• Tax-Exempt rate of return/(1-your
effective tax rate)
• Example: 5%/(1-.25) = 5%/.75 =
6.67%
• To compare tax-free to taxable the
returns must be consistent
• Or must take proper account of
volatility in the accumulation phase

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Average rate of return (hypothetical)
Year BOY ROR EOY
1 $10,000 100% $20,000

2 $20,000 -50% $10,000

3 $10,000 100% $20,000

4 $20,000 -50% $10,000

25% $10,000

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Volatility in Distribution Phase
• An unrealized loss exists only on
paper
• You lose the money only when you sell
the asset for cash
• Once realized, the loss is permanent.

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Volatility in Distribution Phase
• How to protect market assets from
realizing losses in down years?
• Only one solution: leave the money
alone!
• Requires a non-market-correlated
backup to draw from instead.

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Value of taxable and tax-free dollars
• How much is a tax-deferred dollar
worth to you?

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Value of taxable and tax-free dollars
• How about a tax-free dollar? (trick
question)!

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What is a non-market-correlated or
“Buffer Asset"?
• Protects value in market downturns
• Avoids turning paper losses into
realized ones by selling low
• Permits you to defer the loss while you
keep the opportunity to gain.

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What would you use tax-free money to
achieve?

• Lower income tax—drop a tax bracket or

more: smaller withdrawals at lower tax
rate
• Social Security is tax-free if you can keep
your Provisional Income low enough
• Non-market-correlated asset: overcome
volatility and protect long-term growth.

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Conclusions
• Tax-free money can be much more
valuable than taxable money
• It can make your market assets last
longer
• It can make Social Security a more
valuable part of your income
• It provides a death benefit to help
your beneficiaries replace your income
if you pass away.

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Which of your financial products

provide these benefits?
Enhance the value of your Whole Life policy with additional options:5


The Option to Purchase Paid-Up Additions (OPP) Rider allows you to

pay additional money into your policy to increase your death benefit and cash
value. The more you fund it, the faster your cash value grows. If you become
totally disabled, the Disability Waiver of Premium Rider6 can ensure your
policy remains in force, and that your cash value continues to accumulate.
The Chronic Care Rider allows you to leverage your life insurance coverage
to help mitigate the costs associated with chronic illness needs.7

1Allguarantees are based on the claims-paying ability of the issuer.

2Dividends, which provide opportunity for cash value growth, are not guaranteed.
3 Varies by state.
4You can access the cash value in your policy, generally tax free, via partial surrenders and policy loans.

Policy loans accrue interest and reduce the policy’s cash value and death benefit.
5Within certain limits and conditions in jurisdictions where approved. Please consult your 


New York Life agent for complete information.

6There is no additional charge for the Waiver of Premium Rider on all newly issued standard or better

Whole Life policies with face amounts of $99,999 or less, for issue ages under 60.
7Rider available for purchase only at policy issue to insureds of ages 18 through 70. The portion of the

policy’s face amount available to be accelerated (“the Chronic Care benefit pool”) and the benefit period
(25, 50, or 100 months) is selected at issue and is subject to both policy minimum and maximums and
federal limits. To be permanently chronically ill means that the insured is unable to perform two out of six
activities of daily living (bathing, dressing, eating, toileting, transferring, or continence), or has a severe
cognitive impairment and the condition is expected to be permanent. Please see your policy for more
information. In California, the rider is known as “Chronic Illness Rider.”

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‘Bank’ on the living benefits of
whole life.
Use the loan option on your cash value Whole Life policy as a flexible source of
funds. What might you need money for?
Emergency Education Major New home Retirement
funding purchases

If you had to borrow money for any of these needs, where would you get it?

Bank Loan Policy Loan

• Approval process • No approval process
• Possible denial • Cannot be turned down
• Loan amount limited by bank determination • Loan amount limited to cash value
• Interest rate based on credit rating • Competitive interest rate regardless of credit rating
• Must be paid back in a specific time frame • No fixed payment plan
• Need credit/affects credit • No credit check/won’t show up on credit report
• Best of all, you can have the money

with just a simple phone call!

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Three buckets revisited
• Who has changed their mind?
• What are your next steps?
• Not everyone qualifies for life
insurance, or gets a good rating.
• It costs nothing to find out, and you
are not obligated to accept an offer.
• Having the option could dramatically
expand your options in retirement,
and your family’s options anytime.

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Why New York Life?

• Founded in 1845, New York Life Insurance Company has

remained a mutual company serving only our policyholders.

• We have the highest-possible ratings for financial strength

currently awarded to any U.S. life insurer.1

1. Independent individual rating agency commentary as of 7/30/2018

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Please give us your feedback

We value your feedback.

Please take a moment to complete the form.
Thank you!

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