PlanRight • Retirement income comparison
How much do you need to receive the same retirement income?
Compare illustrated IUL retirement cash flow with the amount you would need from a traditional pretax 401(k) or a taxable investment to receive the same amount after taxes.
Compare My Take-Home IncomeFocus on what you can spend.
Receiving $100,000 before taxes is different from having $100,000 available to spend. The source of your money affects how much you need to take out.
IUL retirement cash flow
This example assumes the income rider pays through non-taxable policy loans on a non-MEC life insurance policy maintained in force. Rider conditions and policy costs apply.
Traditional pretax 401(k)
Fully pretax withdrawals are generally taxable as ordinary income. You need a larger gross withdrawal to reach the same after-tax spending amount.
Taxable investment
When you sell an investment, the gain portion may be taxable. The return of your original investment basis is generally not taxed again.
Same take-home income calculator
Compare the amount needed before taxes.
Start with the annual income you want to receive, then adjust the tax assumptions. Each result targets the same after-tax amount.
IUL income rider
Annual policy-loan cash flow needed
Conditional non-taxable treatment
Assumes qualifying policy loans, non-MEC status, an in-force policy, and compliance with rider terms. Insurance, rider, and loan costs are not shown as taxes.
Traditional 401(k)
Annual withdrawal needed before taxes
Taxable investment
Annual investment sale needed before taxes
Your comparison
This is a comparison of tax treatment during retirement. It does not establish equal funding, investment returns, costs, or lifetime sustainability.
Simplified flat-rate estimate. Assumes age 65, fully taxable pretax 401(k) withdrawals, and investment sales consisting of basis plus long-term gains. Does not calculate tax brackets, deductions, credits, early-distribution taxes, investment losses, dividends, Social Security taxation, or Medicare premium effects. State taxes and net investment income tax are excluded unless reflected in your selected rates. Results are rounded to whole dollars.
What your IUL illustration actually shows
The supplied FlexLife illustration shows a male insured at issue age 45, preferred non-tobacco, in California. It assumes $100,000 annual premiums for two years, followed by $50,000 annually for 18 years: $1,100,000 in total planned premiums.
Under current non-guaranteed assumptions, the illustrated lifetime income rider begins at age 65 with $11,738.21 monthly—approximately $140,859 annually. The guaranteed ledger shows $59,226 annually under its assumptions.
Changing the calculator's income target does not estimate how much premium a different IUL policy would require. A personalized illustration is needed for that.
Request a Personalized Income ComparisonTaxes matter. So do costs and benefits.
The potential for non-taxable retirement cash flow is one reason to evaluate life insurance as part of a broader financial plan.
Whether paying for insurance is a good move depends on the complete picture: your need for coverage, premiums, policy and rider charges, loan costs, access to money, and the benefits you receive. Pretax retirement plans may offer contribution deductions and employer matching.
IUL premiums generally use after-tax money. Therefore, taxes shown on a future 401(k) withdrawal cannot automatically be treated as a lifetime financial advantage for IUL. A complete comparison should use consistent funding assumptions and include costs and benefits over time.
Common questions
Why does the 401(k) need a larger withdrawal?
Part of the withdrawal is used to pay income tax. For example, at a 25% assumed tax rate, a $100,000 withdrawal leaves $75,000. To receive $100,000 after taxes, you would need about $133,333. This calculator assumes a fully pretax account; qualified Roth distributions have different treatment.
Why is the taxable investment treated differently?
The sale proceeds contain both your adjusted investment basis and any gain. This calculator taxes only the assumed long-term gain portion. Your actual basis and the assets sold determine the taxable amount.
Are CDs taxed as capital gains?
Interest on a CD held outside a retirement account is generally ordinary taxable income, not long-term capital gain. Your original deposit is not taxed again when returned. To compare newly taxable CD interest only, set the gain portion to 100% and set the tax rate in the investment section to your assumed ordinary income rate. That setting compares interest cash flow; it does not calculate the CD balance required or a withdrawal of principal.
Is IUL retirement cash flow always tax-free?
No. This example assumes rider payments through policy loans on a non-MEC policy maintained in force. Loans reduce available cash value and death benefits. Lapse or surrender with outstanding loans can create taxable income. Modified endowment contracts have different tax rules. Policy and rider terms matter.
Does the calculator prove IUL is the better choice?
No. It demonstrates how different tax treatment affects the gross amount required for the same take-home target. It does not compare total lifetime costs, accumulation results, contribution deductions, employer matching, insurance needs, or financial suitability.
Does each option provide guaranteed lifetime income?
No. A 401(k), CD, or investment account by itself does not guarantee lifetime payments. This calculator does not determine whether those accounts can sustain the displayed withdrawals. The IUL rider has its own eligibility requirements, charges, and contractual lifetime payment provisions.
See what the comparison looks like for you.
Review your income goal, tax assumptions, insurance needs, and available options in one conversation.
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