“What we have done for ourselves alone dies with us; what we have done for others and the world remains and is immortal.”
— Albert Pike
The current market conditions have been unforgiving to all walks of life, but seniors and retirees especially feel the pain in their portfolios. As an advisor who deals extensively with seniors, many of my clients come to my practice with the desire to live on less money to enable them to leave behind a legacy for their children and grandchildren. Unfortunately, diminishing returns make it nearly impossible for them to have a financial legacy. In order to help them supplement their portfolios, we use what we call the “APPle” method of planning.
“A” stands for “active investing,” where we use active investment management options. The first “P” is “passive investing,” where we choose passive investment management options. The last “P” represents “protected” investments, or lifetime income guarantees, such as life insurance-based income streams. Finally, the “le” stands for “legacy,” where a portion of their assets are used for purchasing life insurance to pass along the value of those assets to the next generation.
For instance, if my client has $1 million, I might suggest using life insurance to most wisely and effectively create a legacy. If the client decides to purchase the product, he or she can increase the distribution rate to 6.5% or 7%, rather than just a 4% distribution, while depleting the principal over a 30-year period. In this scenario, the life insurance becomes the legacy, tax-free.