Divorce, Retirement, and Why Your 401(k) Alone Might Not Be Enough

Most people think saving for retirement is simple: Max out your 401(k). Maybe add an IRA. Wait for the money to grow.

But here’s the truth: putting all your retirement money into one tax bucket could be one of the biggest financial mistakes you ever make.

Why? Because every dollar you pull from a 401(k) or IRA in retirement is taxed as income. And if tax rates rise in the future—as many experts predict—you’ll be writing bigger checks to Uncle Sam than you ever planned.

Now, imagine you’ve gone through divorce. Your assets may already be split. Your retirement timeline may have shifted. The last thing you want is to lose more to taxes.

That’s why diversifying your retirement strategy matters.

One tool that doesn’t get enough attention is the Index Universal Life (IUL) policy.

I know what you’re thinking: Life insurance for retirement? Yes. And here’s how it works:

• Redirect $300 from each biweekly paycheck into a properly designed, max-funded IUL.

• That’s $7,800 a year.

• Over 30–35 years, at a 6–7% average crediting rate, it could grow to about $1.2 million.

• From there, you could pull around $36,000 per year—tax-free—for retirement.

That’s not theory. That’s math.

Now, instead of relying only on your tax-deferred 401(k) or IRA withdrawals, you’ve built a second retirement income stream that’s:

• Tax-free

• Protected from market losses

• Flexible

This isn’t about replacing your 401(k). It’s about building multiple tax buckets, so you’re never trapped by rising taxes or market volatility.

The wealthy have been using this exact strategy for decades. Banks do it, too. Because it works.

Here’s my advice:

• Always grab your company match in your 401(k)—that’s free money.

• But don’t stop there. Look at smarter, more tax-efficient options (like an IUL) to create flexibility and balance.

Don’t just plan for retirement. Plan for tax-smart retirement.

You’re just one smart money move away from peace of mind.

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Disclosures:

This content was generated with AI assistance. While we strive for accuracy, AI may not capture all current laws and market conditions. This information is for informational purposes only and should not be considered personalized financial advice. Always consult a licensed financial advisor for decisions tailored to your unique situation and goals. AI is used to enhance insights, not replace professional guidance.

Money Matters Wealth Solutions is a dba of The Wealth Boutique, a registered investment advisor with the Securities and Exchange Commission. The Wealth Boutique and each of the DBAs are not under common ownership but owned and operated separately. All financial planning and advisory services are provided by The Wealth Boutique. All investments involve risk and unless otherwise stated, are not guaranteed. Be sure to consult with a tax professional before implementing any investment strategy.| Full Disclosure | CRS

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