If you’re like most physicians, finding the time to research unique strategies to fund your retirement can be quite daunting. With increased work hours, ongoing regulatory changes and less pay, you may be wondering how you’ll ever be able to hang up your “white coat” and enter retirement comfortably and secure in your decision making process.
Physicians are quite unique in the sense their problems are unique as well. Between high school, college, medical school, residency and advanced fellowships, many physicians can accumulate much debt as they delay their maximum earning potential into their late 30’s or early 40’s. Although delayed gratification can be a good thing, this delay of “real” income poses a problem to many physicians as they don’t have the proper “runway” of time necessary to accumulate long term saving dollars for retirement. This is yet another reason why the Leveraged Distribution Strategy may play a significant role in long term retirement income planning, as leverage can be used too max fund an insurance contract for tax free income in later years. Please refer to the chart below.
Tennyson Capital Partners is here to help. We have developed a strategy to allow you to continue making the needed investments in your medical practice and outside investments, while at the same time partially funding a supplemental retirement plan outside of your company. This is a strategy for you and is not governed by ERISA. Tennyson's Leveraged Distribution Strategy incorporates the use of premium financing to fund a low cost life insurance policy that can generate significant cash value and future income potential in retirement.
This is how The Leveraged Distribution Strategy can create a great value proposition for your retirement income needs:
- A life insurance policy is funded by borrowing premium at a low interest rate from one of our niche banks that specialize in premium financing. Each quarter, you pay the interest and a little principal for 10 years, give or take a few.
- Your current life insurance needs are covered with a permanent policy that can provide liquidity or enhance your legacy in the future.
- You keep most of your assets reinvesting in the business to grow its business value prior to retirement.
- The premiums are invested inside of a unique strategy, providing competitive returns that give you access to upside capture in the market with a cap and a floor that protects you from the negative returns from the markets.
- At retirement, a portion of your liquidity event from the sale of your business can be used to pay off the remaining loan, creating an arbitrage between the low financing rate and the return on the business.
- You begin making policy loans against the cash value of the policy in retirement, creating a significant tax-free income stream throughout your retirement.
- As long as the insurance policy is kept for the remainder of your life, the internal loans will be forgiven at death and paid from the life insurance gross proceeds.
We will design a tailored strategy for you that will not require a liquidity event to pay off the loan, but will give you flexible options to solve your retirement income needs. We welcome the opportunity to help you and your advisors explore The Leveraged Distribution Strategy and how it may be a fit for your current and future needs.
*This material is for general information only, examples are for illustrative purposes only, and is not intended to provide specific advice or recommendations for any individual. No strategy assures success or protects against loss. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified advisor.