“I need to research more as this is the first time I am hearing of this”: I’m torn between investing in Universal Life insurance or a Roth for retirement. Which option will secure my future better?

Hi Money Minder,

Just chatting with my partner about our retirement plans. I’m all about my 401k and Roth, while he’s got that 401B he’s rocking with just employer contributions. Been trying to pitch him the idea of opening a Roth and getting some contributions going, but he’s really into the whole Universal life insurance for retirement game. I’m kind of clueless on this, so anyone out there use Universal life insurance for retirement income? Is this a solid long-term plan?

Cheers,
Financially Curious

Response from THE MONEY MINDER:

Hello There,

While discussing retirement plans can be an exciting phase in life, it’s essential to approach it with a level head and practicality. Firstly, congratulations on being proactive about your retirement savings, as having a diversified portfolio is crucial. Regarding your husband’s interest in Universal life insurance for retirement, it’s good that he’s exploring different options, but it’s also important to thoroughly research and understand the implications.

Universal life insurance can be a viable option for retirement income, as it provides both a death benefit and a savings component. However, it’s crucial to consider the fees, policy restrictions, and potential returns compared to other retirement savings vehicles like Roth IRAs. It’s wise to consult with a financial advisor to fully grasp the pros and cons of Universal life insurance and how it fits into your overall retirement strategy.

In terms of your suggestion for your husband to start contributing to a Roth IRA, this is indeed a beneficial move. Roth IRAs offer tax-free growth and withdrawals in retirement, providing a valuable source of tax-free income. Encouraging him to open a Roth IRA in addition to his 401B can further enhance your retirement savings and diversification.

Ultimately, finding the right balance between different retirement savings vehicles, such as a mix of employer-sponsored plans like 401k and 401B, Roth IRAs, and potentially Universal life insurance, can help secure a stable financial future. Research, careful consideration, and seeking professional advice will be instrumental in making informed decisions. All the best from THE MONEY MINDER as you navigate your retirement planning journey.