Hey ya'll. I did a search but didn't see this specific topic.
Like many people, I got sucked into buying a whole life policy when my kids were young. I retired at 63 and am now 66. The death benefit is $225,000. The surrender value is about $115,000 last I checked.
We sold an asset that will pay us almost enough to live on until I'm almost 70 so I'm delaying SS until then. However, its close to the time when I need to either pull money out of the life insurance policy or from our investments.
When I take SS, the SS plus a reasonable 4% withdrawal rate from investments will give support us quite comfortably. My wife is 5 years younger, in great health and we've made the SS decision based on the likelihood that at least one of us will live quite some time.
So what is the best way to get cash out of the whole life policy? I can borrow against it and have no taxable income up to a point, but we're debt free and I would like to avoid paying interest. If I surrender it, some portion of it, and likely a substantial portion, will be taxable. On the third hand, much of non IRA type monies are tax free, so our tax situation will be more favorable perhaps then when I have to start pulling from the IRAs.
Suggestions? Thanks.
Like many people, I got sucked into buying a whole life policy when my kids were young. I retired at 63 and am now 66. The death benefit is $225,000. The surrender value is about $115,000 last I checked.
We sold an asset that will pay us almost enough to live on until I'm almost 70 so I'm delaying SS until then. However, its close to the time when I need to either pull money out of the life insurance policy or from our investments.
When I take SS, the SS plus a reasonable 4% withdrawal rate from investments will give support us quite comfortably. My wife is 5 years younger, in great health and we've made the SS decision based on the likelihood that at least one of us will live quite some time.
So what is the best way to get cash out of the whole life policy? I can borrow against it and have no taxable income up to a point, but we're debt free and I would like to avoid paying interest. If I surrender it, some portion of it, and likely a substantial portion, will be taxable. On the third hand, much of non IRA type monies are tax free, so our tax situation will be more favorable perhaps then when I have to start pulling from the IRAs.
Suggestions? Thanks.